Transcript

IN THE SUPREME COURT OF THE UNITED STATES

SOUTH DAKOTA, Petitioner, v. ELIZABETH H. DOLE, SECRETARY, UNITED STATES DEPARTMENT OF TRANSPORTATION

No. 86-260

April 28, 1987

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:53 o'clock a.m.

APPEARANCES:

ROGER A. TELLINGHUISEN, ESQ., Attorney General of South Dakota, Pierre, South Dakota; on behalf of the petitioner.

LOUIS R. COHEN, ESQ., Deputy Solicitor General, Department of Justice, Washington, D.C.; on behalf of the respondent.

PROCEEDINGS

CHIEF JUSTICE REHNQUIST: We will hear arguments next in South Dakota against Elizabeth H. Dole, Secretary, United States Department of Transportation.

Mr. Tellinghuisen, you may proceed whenever you are ready.

ORAL ARGUMENT BY ROGER A. TELLINGHUISEN, ESQ., ON BEHALF OF THE PETITIONER

MR. TELLINGHUISEN: Mr. Chief Justice, and may it please the Court, the issue in this case is whether or not Congress may condition the receipt of highway funds upon a state having in effect the 21-year-old drinking age. In 1984 Congress enacted 23 USC Section 158. Section 158 of that Act conditions a receipt of highway funds upon a state having in effect a 21-year-old drinking age for all alcoholic beverages. The Act prohibits or mandates that the Secretary of Transportation shall not distribute 5 percent of a state's highway funds if it is not in compliance for Fiscal Year 1987, and it further mandates that the Secretary will withhold 10 percent of those funds for each and every year thereafter that the state has failed to comply.

South Dakota, like every other state in the nation, is a recipient of Federal highway funds under the programs referred to in Section 158.

QUESTION: General Tellinghuisen, would you explain whether you think this case might be moot now? South Dakota has changed the law, as I understand it.

MR. TELLINGHUISEN: That's correct, Your Honor. What I would point out to the Court is that in the last legislative session, recognizing that South Dakota, not unlike any other state in the Union, is dependent upon these funds, adopted a 21-year-old drinking age that will not go into effect until April 1st of 1988.

QUESTION: So it still has a year or so to run, a year to run?

MR. TELLINGHUISEN: That's correct.

QUESTION: Under the old system.

MR. TELLINGHUISEN: Yes. Right now South Dakota still permits 19 and 20-year-olds to consume low point beer.

QUESTION: And there are Federal funds at issue, so it is saved from mootness.

MR. TELLINGHUISEN: That's correct, Your Honor.

QUESTION: Then am I not correct the statute doesn't go into effect at all if you prevail here?

MR. TELLINGHUISEN: That's correct. The legislature in enacting the law that it passed this legislative session specifically provided within the statute itself that the legislation would repeal itself upon either a favorable decision from this Court or upon Congressional action repealing the mandatory withholding provisions of Section 158.

QUESTION: We know how to do things out in the upper midwest.

MR. TELLINGHUISEN: That's correct. For the past 48 years South Dakota has allowed persons younger than age 21 to consume low point beer, ever since South Dakota has adopted an approach that not only recognizes the social concerns over alcohol but has gradually introduced its young people to alcoholic beverages. Twice since 1939 we have raised our minimum drinking age for low point beer from 18 to 19, and since the repeal of state prohibition in 1934 we have required all persons to be at least 21 years old before they would be allowed to consume alcoholic beverages other than low point beer.

South Dakota has likewise enacted and strictly enforced drinking driver statutes, and over the course of the last few years through the strict enforcement of those statutes we have effectuated a 30 percent reduction in the number of drinking-related fatalities on our highways.

In September of 1984 we filed a complaint in District Court, seeking a declaration that Section 158 was unconstitutional and further requesting an injunction prohibiting the Secretary of Transportation from enforcing the provisions of that statute. The District Court dismissed and the Court of Appeals affirmed on the basis that South Dakota's complaint failed to state a claim upon which relief can be granted.

Just by procedural -- or just by a little bit of history, as this Court is aware, in 1933 this nation adopted the Twenty-First Amendment, thereby repealing 16 years of national prohibition and reserving to the states the power of choice as to whether or not to allow the importation of alcoholic beverages within their own states.

This Court has also recognized that a state has the absolute power to prohibit totally the sale of alcohol within its own borders pursuant to the Twenty-First Amendment, and this Court has equally recognized that a state has broad power under the Twenty-First Amendment to regulate the times, places, and circumstances under which alcohol may be sold. As this Court stated in New York State Liquor Authority versus Balianca, "It is equally well recognized that a state has broad power under the Twenty-First Amendment to regulate the times, places, and circumstances under which liquor may be sold."

Put another way, this Court stated in California Liquor Dealers v. Midcal that the Twenty-First Amendment grants the states virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system.

In resolving conflicts between state alcohol regulations and Federal policies, the Court has first sought to determine whether the state regulation that was involved implicates what this Court has generally characterized as a Section 2 core power. The Court has suggested that when a state has attempted to directly regulate a Section 2 core power under the Twenty-First Amendment that it will prevail irrespective of its conflict with a contrary Federal policy.

The state would submit to the Court, recognizing that this Court has never formally offered a clear delineation of what constitutes a Section 2 core power, that the ability of a state to determine for its own inhabitants or for its own -- the people found within its borders, the age at which a person will be allowed to consume an alcoholic beverage is central to the power reserved to the states under the Twenty-First Amendment.

This Court, as I indicated earlier, recognized that a state has the absolute power of prohibition --

QUESTION: Of course, South Dakota can still continue to do that, can't it?

MR. TELLINGHUISEN: That's correct, Your Honor. However, the Constitutionally impermissible part of Congress's plan is that it forces South Dakota to make a choice of whether or not it will freely exercise the powers given to it under the Twenty-First Amendment or whether it will suffer --

CHIEF JUSTICE REHNQUIST: You can finish your answer at 1:00 o'clock, Mr. Tellinghuisen.

MR. TELLINGHUISEN: Thank you, Your Honor. (Whereupon, at 12:00 o'clock p.m., the Court was recessed, to reconvene at 1:00 o'clock p.m. of the same day.)

AFTERNOON SESSION

12:59 P.M.

CHIEF JUSTICE REHNQUIST: Please proceed, Mr. Tellinghuisen.

ORAL ARGUMENT OF ROGER A. TELLINGHUISEN, ESQ., ON BEHALF OF THE PETITIONER - RESUMED

MR. TELLINGHUISEN: Mr. Chief Justice, and may it please the Court, in direct response to Justice Blackmun's question concerning the ability of the states to still have a choice even in the face of Section 158, I would submit to the Court that that is erroneous or that assumption is in error for two reasons.

One, it presupposes that the Federal Government has the ability to regulate in the face of the Twenty-First Amendment the age at which a state such as South Dakota sets its minimum drinking age, and secondly, it is in direct contradiction to the legislative history that surrounds the original amendment in its debate over what was then contained as a Section 3 to the amendment, which would have given Congress concurrent power to regulate or prohibit the sale of intoxicating liquors where those liquors were to be drunk on the premises sold. At that time, unlike the inconsistencies that were present in the debate over Section 2, there was no inconsistency in that regard. It was the intent of Congress by deletion of Section 3 to remove the Federal Government from the area of alcohol regulation within a state from which it had in the opinion of Congress and in the opinion of this Court had trespassed.

QUESTION: Well, Mr. Tellinghuisen, you think the Twenty-First Amendment went further than just to deal with the commerce power of Congress then?

MR. TELLINGHUISEN: Yes, I do, Your Honor, and I rely on this Court's decisions in addressing the Twenty-First Amendment when this Court has said that the Twenty-First Amendment, while it is transparently clear that it operated as a limitation upon the commerce clause, it equally recognized that the Twenty-First Amendment gave to the states broad powers to regulate in the area of the times or places or even the sale of liquor, in other words, the liquor distribution system within that state.

QUESTION: Well, don't you think they would have had that just under traditional reserve power of states?

MR. TELLINGHUISEN: Well, I would certainly maintain that, Your Honor. I recognize, however, this Court's decisions in regards to the commerce clause in the face of the Tenth Amendment, and that the Tenth Amendment does not in and of itself operate as a limitation on Congress's power. I think the distinction here is that in the face of the Twenty-First Amendment Congress intended and the states upon ratification of the Amendment assumed that they were going to be given the power to first off determine whether they would permit the sale of alcohol at all, and if they chose to, to enforce the regulations surrounding the sale of that alcohol.

QUESTION: And here you say that because Congress is cutting off 5 percent of South Dakota's highway fund money, South Dakota is not able to do what it wants?

MR. TELLINGHUISEN: That's correct, and I am suggesting -- what I am suggesting to the Court is that the presentation of the choice irrespective of the amount of money involved is what -- is the impermissible derogation of the state's powers under the Twenty-First Amendment.

QUESTION: There are a lot of cases that have sustained the Congress's spending power, Steward Machine Company, a long line of cases.

MR. TELLINGHUISEN: That is correct, Your Honor. We are certainly not unmindful of those cases, and for the Court to rule in the state's favor on this case would not require this Court to overrule any of those prior cases concerning limitations or claimed limitations on Congress's power under the spending clause. In the Steward Machine case, for instance --

QUESTION: You mean provided we gave the Twenty-First Amendment the broader preemption that you would argue should be given. What if we think that the Twenty-First Amendment only took away Congress's power under the commerce laws?

MR. TELLINGHUISEN: I would say, Your Honor, that if the Court were to find that the operation of the Twenty-First Amendment only prevented Congress from interfering with a state's right to allow into the state the importation of alcohol, that certainly would put us in a more difficult position, but that is not what this Court has recognized in, for instance, Capital Cities Cable versus Crisp. The Court in that case, if I may just briefly recite from that opinion, the Court stated, "In contrast to state regulation governing the conditions under which liquor may be imported or sold within the state, the application of Oklahoma's advertising ban to the importation to distant signals by cable television operators engages only indirectly the central power reserved by the Twenty-First Amendment, that of exercising control over whether to permit importation or sale of liquor and how to structure the liquor distribution system."

Following that line of reasoning that this Court has adopted not only in Capital Cities Cable v. Crisp but in Midcal and again referred to in this Court's most recent decision dealing with the Twenty-First Amendment, 324 Liquor versus Duffy. The states are given this broad power in areas not only related exclusively to the decision of whether or not to permit importation but they are given the power to regulate the very liquor that it allows under its ability to allow importation.

QUESTION: It didn't say that. It said to structure the distribution system.

MR. TELLINGHUISEN: I'm sorry.

QUESTION: That is not quite what the quote you read said. It said the state's power to structure the distribution system, which is much more closely tied to the importation. One imports and one distributes. It is very easy to say that the structure of the distribution system has a very close tie to the importation, which is what the Twenty-First Amendment specifically addresses.

MR. TELLINGHUISEN: Your Honor, what I would also --

QUESTION: This has nothing to do with the distribution system.

MR. TELLINGHUISEN: Well, in effect it does, Your Honor. I guess I would argue that point in that the distribution system of alcohol is certainly directly related to or is one and the same of determining how it can be sold or distributed within the state, and the setting of a minimum drinking age is basic to that consideration.

QUESTION: You think the setting of -- well, all right. You are going to be arguing later when you address the scope of the Federal Government's commerce power that one can't stretch things to infinity, and it seems to me you are arguing a very broad notion of what importation includes and distribution includes. It includes even fixing the qualifications for purchasing.

MR. TELLINGHUISEN: Yes, I would argue that, and in part our reliance, Your Honor, is based upon this Court's decision in New York State Liquor Authority versus Balianca, where the Court stated, "It is equally well recognized that a state has broad power under the Twenty-First Amendment to regulate the times, places, and circumstances under which liquor may be sold." The Congressional --

QUESTION: You think the Federal Government could keep you from selling liquor to a certain defined group of people like Indians?

MR. TELLINGHUISEN: No, I don't believe they could, Your Honor. I am not sure I understand the question correctly. Could the Federal Government require us not to sell to a specific group of people?

QUESTION: Like the Indians. Um-hm.

MR. TELLINGHUISEN: I would say that, no, it could not.

QUESTION: And so therefore using the spending power for that purpose is just as illegal. Is that it?

MR. TELLINGHUISEN: I would suggest that that is the case.

QUESTION: Under the Twenty-First Amendment.

MR. TELLINGHUISEN: Yes, sir. Going back to the Congressional intent behind the adoption of the Twenty-First Amendment, it was well recognized in 1933 as well as now the national prohibition, the national policy of --

QUESTION: Well, do you think the Federal Government could keep you from -- a state-operated liquor store, for example, selling on military reservations?

MR. TELLINGHUISEN: I think this Court's holdings, for instance, in the Collins v. Yosemite -- Yosemite -- excuse me -- case would suggest just that, and I don't have a problem with that.

QUESTION: But you think they couldn't -- the Federal Government couldn't keep -- couldn't forbid sales to servicemen off the base?

MR. TELLINGHUISEN: Yes, I would maintain that. And the point, the distinguishing factor, Your Honor, between the example that you cite and the premise that we are advocating is that in the context of a military reservation the state cannot impose its will upon an area that is not under its jurisdiction.

QUESTION: (Inaudible) for Federal money.

MR. TELLINGHUISEN: I would concede that. I would concede that, and that brings us to the point, the question has often been stated in another way. Could Congress just refuse to just give this money to the states in the first instance, and that is -- the answer to that must be yes. We have no actual entitlement to money in the first instance.

QUESTION: Mr. Attorney General, could I go -- I want to be sure I understood your answer correctly. I think Justice White asked you -- maybe this is a variation of the question. You say Congress passed a statute saying it shall be unlawful for any purveyor of liquor, either in a bar or so forth, to sell liquor to a uniformed soldier. You say that would be unconstitutional.

QUESTION: That's what you said. You can think it over if you want to.

(General laughter.)

MR. TELLINGHUISEN: Well, okay.

QUESTION: And I was going to -- Let me give you another one that is similar. Supposing they required all interstate truck-drivers and bus drivers to wear some kind of an identifying cap or uniform of some kind and they said, you may not sell liquor to any of those drivers of interstate vehicles. Would that be unconstitutional?

MR. TELLINGHUISEN: Are we assuming that Congress is going to condition the receipt of money on --

QUESTION: No, just say flatly, it is against a Federal statute enacted for the purpose of protecting safety on the highways to sell liquor to any uniformed driver of a truck or a bus.

MR. TELLINGHUISEN: I would submit that it would be unlawful.

QUESTION: It would be unconstitutional?

MR. TELLINGHUISEN: Yes, because again, Your Honor, it goes to th every heart of the Twenty-First Amendment.

QUESTION: And you would have to say the same about the soldier.

MR. TELLINGHUISEN: Yes, I would, Your Honor.

QUESTION: If you lose on that, you lose on the one in the case you are arguing?

MR. TELLINGHUISEN: No, I don't believe so, because our case that we are arguing is much more narrowly defined. You know, as this Court has noted in many of its opinions there will be time enough to address those types of questions. We are suggesting that the blanket provision requiring the states to adopt a uniform drinking age in the face of the Twenty-First Amendment takes away from the state the ability to make those decisions for itself. And that was what Congress and this nation was addressing when it adopted -- or repealed prohibition.

QUESTION: Let me take it one step further. What about airline pilots in uniform? The Federal Government couldn't even prevent sale of liquor to them?

MR. TELLINGHUISEN: I would have to steadfastly maintain that they could not, Your Honor.

QUESTION: You are consistent.

QUESTION: Of course I take it you argue that you should win even if there were no Twenty-First Amendment.

MR. TELLINGHUISEN: I am not going to go so far as to say that, Your Honor. I think that it could be suggested that Congress under its commerce clause powers could impose a regulation upon the states which it otherwise could not do in the face of the Twenty-First Amendment.

QUESTION: I thought you were arguing that these conditions on receipt of Federal money were invalid in themselves.

MR. TELLINGHUISEN: I am arguing --

QUESTION: Wholly aside from the Twenty-First Amendment. Don't you argue that?

MR. TELLINGHUISEN: No, I don't. I suggest in our brief that the conditions are invalid outside the context of the Twenty-First Amendment from the standpoint that they are coercive.

QUESTION: Well, do you disavow the argument then submitted by the National Conference of State Legislatures in their amicus brief to the effect that there has to be a substantial relationship between the condition imposed on a grant and the spending of Federal money?

MR. TELLINGHUISEN: Your Honor, I am not in a position to suggest to this Court that I disagree with that proposition.

QUESTION: Well, you certainly are. You can say it is right or it is wrong.

QUESTION: You just did a while ago.

MR. TELLINGHUISEN: What I am suggesting is that I am not prepared to address that issue in light of the fact that we have the Twenty-First Amendment. I think it would be --

QUESTION: What if you lose on that, and this Court is having to grapple with it? Is that an argument you make or is it not?

MR. TELLINGHUISEN: It is from the standpoint that Congress's power under the commerce clause is not without limitations, as this Court has noted, for instance, in Lawrence County v. Lead-Deadwood School District. And we would submit to the Court that the Tenth Amendment would operate as a bar upon Congress to impose these types of conditions which in effect are coercive upon the states, and that are being used -- is being attached for a purpose not related to --

QUESTION: That is the same argument.

QUESTION: Well, the argument made in that amicus brief is not one of coercion at all. That is not the thrust of it.

MR. TELLINGHUISEN: The argument that is made in the amicus brief is one that the purpose for which the condition is attached is not proper, and I guess I would just have to maintain that I am not prepared to argue that particular fine point at this time because we are not dealing outside the scope of the Twenty-First Amendment.

QUESTION: (Inaudible) suggest then, Mr. Attorney General, that the Tenth Amendment at least is not as much of an inhibitor on Federal regulation as would be the Twenty-First?

MR. TELLINGHUISEN: I think that would certainly be in keeping with this Court's prior decisions.

QUESTION: And that is your position?

MR. TELLINGHUISEN: It may not be a position that I like to advocate, but it is certainly one that I recognize.

QUESTION: It sounds like if you lost on the Twenty-First then you would a fortiori lose on the Tenth.

MR. TELLINGHUISEN: Well, I guess I can sum it up, Your Honor, by just suggesting that if we lose on the Twenty-First Amendment I recognize we are in trouble on the Tenth Amendment.

Your Honor, I would like to reserve the remainder of my time, if I might, for rebuttal.

QUESTION: Thank you, Mr. Tellinghuisen.

We will hear now from you Mr. Cohen.

ORAL ARGUMENT BY LOUIS R. COHEN, ESQ., ON BEHALF OF THE RESPONDENT

MR. COHEN: Mr. Chief Justice, and may it please the Court, I propose to argue two points. First, that Section 2 of the Twenty-First Amendment does not reach this case at all because it does not say that Congress may not in the valid exercise of its own powers bar or encourage states to bar sales of alcoholic beverages that a state might prefer to permit, and second, that Section 158 is a judicious and proper use of the Federal spending power that does not violate either the Tenth Amendment or, if it is applicable at all, the Twenty-First Amendment.

Section 2 of the Twenty-First Amendment prohibits transportation or importation of alcoholic beverages for delivery or use in violation of state law. It thus broadly confirms state power to restrict those activities, notwithstanding obstacles to state regulation that would otherwise be imposed by the commerce clause and sometimes other provisions of the Constitution.

Section 2 may also in some situations prevent Congress from legislating to require or permit activities that violate state law although in every actual case -- I think of Crisp and Midcal and 324 Liquor -- the Federal statute prevailed. But Section 2 speaks only of activities in violation of state law. I suggest that the words simply cannot be read to prohibit Congress from imposing restrictions of its own or encouraging states to impose additional restrictions on alcohol transactions.

QUESTION: Do you think that Congress could bring back prohibition under your view, under the spending power?

MR. COHEN: I don't think that Section 2 answers that question. The Court gave a partial answer to that question back in 1917 in the Clark Distilling case -- this is before Prohibition -- when the Court said -- this is 242 U.S. at 325 -- "It is not in the slightest degree disputed that if Congress had prohibited the shipment of all intoxicants in the channels of interstate commerce and therefore had prevented all movement between the several states, such action would have been lawful because within the power to regulate which the Constitution conferred."

QUESTION: That was before the Twenty-First Amendment.

MR. COHEN: Yes, it was, but it seems to me that if you take the Twenty-First Amendment in its two parts, the passage and later repeal of Prohibition didn't change that, and it seems to me that the plain words of Section 2 don't change that either, because if the Congress were today -- I don't suggest that it is politically likely -- to adopt the statute that was envisioned in Clark Distilling, that statute would not involve any transportation, importation, delivery, or use of alcoholic beverages in violation of state law and therefore would not be prohibited by Section 2 of the Twenty-First Amendment.

QUESTION: What if you take the converse of that situation? Congress decides it has been a bad year for the distilleries and therefore it requires that any state accept shipments even though the state may be dry by choice. It says it is the policy of the Federal Government to require freedom of movement in interstate commerce of hard liquor.

MR. COHEN: I am drawing a distinction between a prohibition and a protection at transactions in alcoholic beverages that it seems to me Section 2 draws. Congress may well be, although the Court has never actually said so, may well be prohibited from legislating in a way that requires the state to accept or allow alcoholic beverages or alcoholic beverage transactions that the state chooses to prohibit because Section 2 --

QUESTION: You are using the word "may" and it sounds as though that sort of requires a little construction of the amendment, too, doesn't it? It is not quite a plain language.

MR. COHEN: Well, I am not trying to make just a wooden plain language argument. What I am suggesting is that the text of the amendment demonstrates an intention to protect the right of the states to restrict or prohibit or tax or burden the delivery or use of alcoholic beverages. It does not by its text, and I think it should not be interpreted to, bar Congress from imposing additional restrictions that don't require transactions the state is trying to prohibit. The text --

QUESTION: How does that tie in with this case?

MR. COHEN: In this case what Congress has done is to pass a statute which encourages the state to prohibit alcoholic beverage transactions that the state chooses not to prohibit, sales to 19 and 20-year-olds. The objection is that the state has some sort of right under the Twenty-First Amendment to allow those transactions to take place. I am suggesting that if you read Section 2 it doesn't say that.

I further suggest that the source from which that text was drawn, the pre-Prohibition Webb Kenyon Act, which -- whose -- further illustrates the point. The purpose of that Act, which was clear from its text and its legislative history and this Court's explanation of that Act in the Clark Distilling case, was to withdraw the protection of the commerce clause so that states could regulate alcoholic beverages in ways that might be -- might otherwise be objectionable obstructions of commerce.

As this Court explained in Craig against Boren, the purpose of Section 2 was to constitutionalize that framework. It was not --

QUESTION: Is 324 Liquor Corporation consistent with that view?

MR. COHEN: I think so. I think that what 324 Liquor suggests is that there are occasions when Federal law may conflict with state efforts to restrict or impose rules on transactions in alcoholic beverages where Federal law nevertheless prevails. But the Twenty-First Amendment was properly involved in the 325 Liquor case because you had a state activity, namely state pricing regulations restricting transactions that is protected by the amendment. In this case we have no transportation, importation, delivery, or use in violation of state law.

Let me illustrate with an example.

QUESTION: So, I mean, you think the states have no power derived from the Twenty-First Amendment to set limits on the age of drinking at all.

MR. COHEN: No, that is not what I am saying. First, I think the states have power to set a drinking age -- police power to set a drinking age wherever they like.

QUESTION: Power under the -- derived from the Twenty-First Amendment.

MR. COHEN: I don't think the states' power --

QUESTION: -- to set drinking ages.

MR COHEN: I don't think the states' power derives from the Twenty-First Amendment at all, but I think the states' power is protected by the Twenty-First Amendment in one direction --

QUESTION: Do you think that might come as a little bit of a surprise to the drafters of the Twenty-First Amendment?

MR. COHEN: No, because Congress and this Court promptly demonstrated their understanding that the Twenty-First Amendment was not intended to restrict the otherwise valid exercise of Congressional power to impose burdens on or additional restrictions on alcoholic beverage transactions in ways that do not require a violation of state law.

Congress enacted the Federal Alcohol Administration Act in 1935 which extensively regulates importation and manufacture and wholesaling and labeling of alcoholic beverages. That statue was challenged in this Court in the William Jameson case in 1939 on the ground that the Twenty-First Amendment turned the whole subject over to the states, and the Court said per curiam, summarily, we see no substance in that contention.

I suggest that what would have startled the 1935 Congress and the 1939 Court would have been a suggestion that states cannot only require, say, wholesalers to get state permits and apply state-approved labels, but can also insist on permitting wholesalers to operate without Federal permits, and on permitting beverages to be sold locally without Federal labels. That, it seems to me, is the parallel here. Maybe I make it clearer if I say that I think that if Congress were attempting to encourage the states to lower their drinking ages, there would be a Twenty-First Amendment problem, and the argument that I am now making would not be applicable, because Congress would be -- I am not necessarily suggesting that a use of the spending clause would be invalid for that reason, but Congress would be encouraging a transaction that violates the state law as it now stands.

What we have here is something --

QUESTION: (Inaudible) need to have a different law. That is all.

MR. COHEN: Yes. Yes.

QUESTION: Mr. Cohen, apart from whether it can contravene the state law, where does Congress get the power to do this?

MR. COHEN: Congress gets the power, I think, under the spending clause, and our only claim is that they have the power under the spending clause.

QUESTION: What is the the spending clause case that you think is closest to this one in the relationship between the purpose of the expenditure and the condition that is imposed upon receipt of the funds? The purpose of the expenditure here is what, improve highways?

MR. COHEN: Let me interject, because I want to, that I think that the -- I think that that question is not before the Court, and I want at least to note that, although I am going to respond, I am going to respond to the question. The -- it was discussed below, but the state didn't raise this question in the Court of Appeals, and it is not, I think, comprehended within either of the questions presented, and I note that the state says in its brief that it has never contended that the Congressional action was unreasonable or unrelated to an national concern in the absence of the Twenty-First Amendment.

If the question is before the Court, it seems to me that the answer is first that the expenditure is plainly within Congress's power under the general welfare clause and second, that the condition attached to that expenditure is within Congress's power under the necessary and proper clause because it is sufficiently germane to the purpose of the expenditure.

One of the express purposes of Federal highway assistance is to promote safe travel. Nevertheless, one of the consequences of this expenditure and the resulting improvement in our highway system is to exacerbate the problem of what President Reagan called blood borders between states. Section 158 is a measure to help achieve the safety purpose and combat the blood border problems. It seems to me that it is open to Congress to decide that it doesn't want to provide full Federal funding for highways in states where those highways may be used by young persons in lawful quest of alcohol.

QUESTION: Is there some limit then on Congress spending power of a requirement of germaneness or relatedness? Could Congress enact this same kind of a grant attached to -- this same kind of condition attached to a grant for school lunch money, for example?

MR. COHEN: The answer is that the Court has frequently said there is some kind of a limit attached to the spending power, and to my knowledge has never said what that limit is. I think there is and I think there should be such a limit. I would hope Congress would recognize such a limit on its own. I think it is a very hard line to draw. But I think it is appropriate for the Court to draw a germaneness line.

QUESTION: Germane to what?

QUESTION: Mr. Cohen, could you answer my question? You still haven't given me the case that you think is -- I don't find that a terribly proximate relationship. We are building highways in order -- I guess partly to increase safety of travel, and one of the things that impairs the safety of travel is kids driving somewhere else to buy liquor. I mean, what about heart attacks? You could say the same thing about heart attacks, so a condition could be, the states have to have some --

MR. COHEN: I will give you Lau against Nichols, where the Court -- where Congress says the recipient of any Federal grant has got to comply with the civil rights laws, and that ends up being interpreted to mean that the city of San Francisco must provide some means for educating its Chinese-speaking children.

QUESTION: But Congress has independent powers to enact civil rights laws. You don't say that Congress has independent power to prescribe drinking age?

MR. COHEN: I am not sure that it has an independent power. I don't know whether it would have had and it certainly wasn't justified in that case on the basis of its having an independent power to impose those particular requirements other than as a condition of the grant of funds, but I will give you Oklahoma against Civil Service Commission, the classic case in this area. Congress provides that any state officer or employee whose employment is primarily in connection with any project that is funded in whole or in part by Federal funds must satisfy the Hatch Act's requirements with respect to political activity. This Court --

QUESTION: But that has to do with the efficient expenditure of the funds. You don't want the funds being expended by political hacks. You want them being expended by what the Federal Government regards as responsible civil service. That is closely connected to the use of the funds. This condition isn't.

MR. COHEN: I don't think that the connection is close. There is no perfect analogy to this case --

QUESTION: I don't even think there is a close one.

MR. COHEN: -- to this case, of course, but in Civil Service Commission the Court pointed out that the United States has no power to regulate the local political activities as such of state officials. It does have the power, said the Court, to fix the terms on which its money allotments to states shall be dispersed. There is no evidence in that case that the particular official had any control over the use of the funds or that the basis on which that condition is sustained is that it applies only to the state -- certainly the statute doesn't say so -- applies only to the state officials who have it.

QUESTION: When you speak of the word "germane," how is that being used as a term? To what does the requirement have to be germane?

MR. COHEN: What I am suggesting and this is, I think, not a particularly well developed area of our jurisprudence, because the Court has never, I think, had occasion to strike down a condition, but what I am suggesting is that the condition must be germane, and I guess I mean within the necessary and proper penumbra of the -- germane to the purpose for which the Federal funds are being expended, and I am suggesting --

QUESTION: Let me, since you can spend federal funds for any purpose that involves the general welfare, that expands the Federal powers into anything at all so long as you -- the Federal Government can spend money for art and suddenly it can begin conditioning those grants to get the states to do things in the field of art that it would have no independent power to achieve.

MR. COHEN: It is certainly correct that the Federal Government can spend money for art and that it can -- and does, and that it can do that in order -- in order, among other things, to get the states to do things that it would have no independent power to achieve, such as by requiring matching grants, such as by requiring that money provided for art be apportioned so that members of minorities or handicapped people or whatever get a share of that money.

QUESTION: That relates to the expenditure of the money. Obviously any condition relating to the expenditure of the money is okay. But this is not a condition relating to the expenditure of the money.

MR. COHEN: Yes, it is. It's a condition that says we don't want to spend Federal money to improve highways that the states permit to be used by teenagers in quest of alcohol, just as Congress could say we don't want to spend Federal money on a school district that doesn't adequately educate one group of its children without regard to whether -- back at Lau against Nichols -- without regard to whether the particular Federal money was earmarked for that purpose or indeed whether any Federal money at all was being used, but to do the things that this Court ended up ordering the San Francisco School District to do.

QUESTION: Mr. Cohen, as I understand your argument, you would agree, would you not, that they could not attach an unconstitutional condition to the acceptance of the grant? For example, they couldn't say you may have the money provided you employ nothing but Republican people, Republicans to build the road, or something like that.

MR. COHEN: Oh, certainly.

QUESTION: Or only Republican (inaudible).

MR. COHEN: Oh, certainly.

QUESTION: So there is a limit to the expenditure grant based on whether the condition would be otherwise illegal, I suppose.

MR. COHEN: There is.

QUESTION: So if this condition should violate the Twenty-First Amendment, you might be in trouble.

MR. COHEN: I would agree that there are other Constitutional restrictions, and that if the Twenty-First Amendment is thought to bar this --

QUESTION: For example, if the condition in this grant were to a state that had Prohibition, they say, we will give you the money provided you repeal your Prohibition law, I think you would probably say that was invalid.

MR. COHEN: Well, first, I think that doing that, that is, moving --

QUESTION: For two reasons. One, it wouldn't make much sense. And secondly, it would also fly right in the teeth of the wooden reading of Section 2 of the Twenty-First Amendment.

MR. COHEN: I guess I don't --

QUESTION: Do you get my hypothetical? I mean, the condition is that the state now has total Prohibition. You can have the money if you repeal your Prohibition laws, if you increase the drinking age, something like that. I think you would agree that that would be --

MR. COHEN: I would agree that that one --

QUESTION: -- your argument at least would prohibit that.

MR. COHEN: I would agree that that creates -- raises a Twenty-First Amendment question. It differs from this case because there the state is seeking to prohibit transactions in alcoholic beverages.

QUESTION: I understand. I did that deliberately. But I am suggesting if you attach a condition that does violate the Twenty-First Amendment, do you not have a serious issue under the --

MR. COHEN: If you say it doesn't violate it, yes, then you have an issue. I don't think that the question --

QUESTION: Which would violate it if it were a direct statute, is what I am saying.

MR. COHEN: Okay. I don't think that the question is the same as the question whether you can attach a condition to Federal funding that somebody sacrifice and individual rights. I don't think that the reserved right --

QUESTION: Why not. What is the difference? Both of them are unconstitutional. Both of them are things that the Constitution would prohibit the Federal Government from doing directly. Can they do those things indirectly by conditioning the grant of funds on compliance with what would otherwise be an unconstitutional requirement?

MR. COHEN: It seems to me that all of this Court's cases holding that powers reserved to the state under the Tenth Amendment may be waived by the state if it chooses to comply with the condition and that a condition that may encourage a state not to exercise a power that it had under the Tenth Amendment is --

QUESTION: You are switching to the Tenth Amendment. You are switching my -- my argument is, my hypothesis is the requirement that is imposed in order to accept the money is that you do something which the Federal Government could not directly require you to do, such as limit the distribution to people of one political party, or two, to require the enactment of a statute that the Twenty-First Amendment prohibits the Federal Government from requiring to be enacted.

MR. COHEN: I am suggesting that there is a difference between the protection of individual rights, as I think you have eloquently suggested on occasion, between the protection of individual rights from being bargained away by conditional state --

QUESTION: I have suggested that in cases where the Court has said there is no hierarchy of constitutional values. We are on a slippery slope when we start drawing distinctions like that.

MR. COHEN: The Twenty-First Amendment protects primarily against the operation of other clauses of the Constitution, the state's power which it otherwise would have given up under the commerce clause and so forth, to restrict transactions in alcoholic beverages. In the case that you suppose it seems to me that the position that the state is in is not dissimilar from the position the state is in exercising a Tenth Amendment power which it has in which the Federal Government presumably cannot directly constitutionally take away from it but which the Federal Government can urge it to exercise in a particular way by conditioning a Federal grant.

QUESTION: You could even condition the grant on every state that adopts a unicameral legislature. That is not a personal right, individual right, so that is okay, you can condition grants on that so long as it is as germane to the object of the grant as this one is germane.

MR. COHEN: I would hope that the Court would find a way to say that that one wasn't germane.

QUESTION: Me, too. But if we couldn't it would be okay.

MR. COHEN: I think that there is in the germaneness test the possibility of saying, look, a very large and very central state interest can't be germane to a very small Federal interest, but in the Lead-Deadwood case, the Court did at least observe that it appeared to be constitutional for Congress to grant money on the condition that a state let the county that was the recipient of that money decide how to spend it for any governmental purpose.

In Oklahoma Civil Service Commission the Court did say we are entitled to decide about -- say that Congress was entitled to require Hatch Act observance by state officials. Those are, I think, Federal statutes that use the spending power in a way that is at least as intrusive upon core state governmental interests as the interest that the State of South Dakota has in permitting 19-year-olds from its own state and from neighboring states to drink beer. The state does have --

QUESTION: What is the source of the government's power to put the 65 -- to put the recently gone 65-mile-an-hour speed limit -- 55?

MR. COHEN: Well, that is also a condition attached to the grant of Federal funds for highway construction.

QUESTION: Do you think the Federal Government had power directly to put that speed limit on, on the interstate highway system?

MR. COHEN: It might. We don't -- but we don't make any such argument as that in this case.

QUESTION: You don't argue that the government directly could say no one who is using alcohol could drive on the interstate highways?

MR. COHEN: No, we don't argue that the government could directly say that each state must adopt a minimum drinking age --

QUESTION: No, no, they just have a national --

MR. COHEN: -- and that is what the government did do.

QUESTION: They just have a national -- no drunk driving law related to interstate highways.

MR. COHEN: I would think that some power to police interstate highways is probably implicit in the commerce clause, yes.

QUESTION: Mr. Cohen, while we are asking hypotheticals, could Congress prescribe the driving age both on the low side and the high side for all the states? In other words, say no person under 18 may drive on a Federal highway, no person over 80 may drive?

MR. COHEN: I would have thought that should Congress choose to do so the Court would sustain that as a valid exercise of the commerce clause.

QUESTION: You say you would not have thought it?

MR. COHEN: I'm sorry?

QUESTION: You would not think Congress had the power to do that?

MR. COHEN: No, I would.

QUESTION: You would think so.

MR. COHEN: I would think the Court would sustain that as an exercise of the commerce --

QUESTION: Congress would have the same safety interest that you --

QUESTION: We couldn't get a quorum to hear that case.

(General laughter.)

MR. COHEN: Let me finish by saying I think President Reagan was right in this case when he said that Section 158 is a judicious use of Federal power. There is an important and inherently Federal interest in eliminating the incentive to drink and drive that is created by differing minimum drinking ages between states.

Thank you.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Cohen.

Mr. Tellinghuisen, you have seven minutes remaining.

ORAL ARGUMENT BY ROGER A. TELLINGHUISEN, ESQ., ON BEHALF OF THE PETITIONER - REBUTTAL

MR. TELLINGHUISEN: I would like to take up where Mr. Cohen has just left off, and that is the Federal interest that has been in essence the cornerstone of this regulation or this condition that the Congress has imposed under Section 158. The problem with standing up and suggesting that this is an inherently Federal interest ignores the very basic realities that each and every state is just as concerned about its kids as the Federal Government, but we in South Dakota have chose a different way of addressing and preserving and attempting to reduce the incident of teenage alcohol and driving-related fatalities, and that is through the enforcement of stricter drinking and driving laws, additionally through education. There is a wide variety --

QUESTION: How can you say that allowing drinking up to the age of 21 is stricter than allowing it up to the age -- I mean up to the age of 19 is stricter than allowing it up to 21?

MR. TELLINGHUISEN: I am sorry, Your Honor.

QUESTION: You say you are enforcing stricter laws, but as I understand it you are trying to defend a law that is less strict.

MR. TELLINGHUISEN: That is true.

QUESTION: It allows drinking by people under 21. That is less strict than --

MR. TELLINGHUISEN: That is absolutely true. Two things I would like to point out very quickly, and that is, in South Dakota, with our 19-year-old age at which people can consume 3.2 beer, these establishments, the 3.2 beer licensed establishments are separate and distinct from a regular alcohol establishment.

The other thing is, though, it underscores --

QUESTION: What do you make out of that?

MR. TELLINGHUISEN: Well, I just -- I wanted to throw that out more for informational purposes than for -- I just want to suggest that we recognize the special place --

QUESTION: It is still less strict to allow you to drink 3.2 beer at age 20 than to allow you to drink no alcohol at age 20.

MR. TELLINGHUISEN: That's correct, and the point I was going to make is that that underscores, however, South Dakota's attempt, or a recognition of not only a problem but making a sincere attempt at addressing that problem in a way that is different from the other states. We are suggesting that the gradual introduction of alcohol in a person's life is better than when they reach 21 just shoving them through the door. And that is the philosophy that is underscored by the --

QUESTION: (Inaudible) people who drink 3.2 beer are unaffected by it.

MR. TELLINGHUISEN: Oh, absolutely not, Your Honor.

QUESTION: And that under your law it may well be that there will be more young people on the roads who have been drinking and affected by it than would be the case if no one could drink until he is 21.

MR. TELLINGHUISEN: I would say that the incidence --

QUESTION: Isn't that right?

MR. TELLINGHUISEN: Well, that is one analysis that could be made, and in fact that is the analysis that --

QUESTION: Well, is there something wrong with it?

MR. TELLINGHUISEN: Well, I just want to clarify, Your Honor, that there are parts of that assumption that don't necessarily follow, and there are other parts of it that are left outside of the consideration. First off --

QUESTION: You don't think that even -- there might even under your law as compared with what the Federal Government wants to achieve that there wouldn't at least be ten drivers a year on the road who had been drinking?

MR. TELLINGHUISEN: Your Honor, given my experience as a state's attorney, I can assure you that there will probably be more than ten.

QUESTION: Yes, so the answer to my previous question is yes.

MR. TELLINGHUISEN: Yes, but what I would like to point out, Your Honor, is that if we impose a 21 drinking age in South Dakota, we could equally find that we are driving 18, 19, and 20-year-olds out into the countryside to consume alcoholic beverages, not only restricted to 3.2 beer, and that in and of itself puts them behind the wheel of a car. The very problem that Congress was trying to circumvent or remove --

QUESTION: Well, are we to decide this case on whether 19 or 21 years is the proper age?

MR. TELLINGHUISEN: That's absolutely correct, Your Honor.

QUESTION: We are not going to decide on that?

MR. TELLINGHUISEN: No, no. The issue in this case is not what the drinking age should be. The issue is who should be able to determine for each individual state what that drinking age should be, and again I would just submit that this Court's --

QUESTION: May I give you one other hypothetical I have been thinking about in view of your reliance on the states' power under the Twenty-First Amendment? Supposing as a condition of a grant to build interstate limited access highways they require you to set up so many gas stations at intervals where the people can stop without getting off the highway, and they further provide that no liquor may be sold in any of those. I take it you would say that was an -- exceeded Congress's power.

MR. TELLINGHUISEN: Yes, sir. I would. I just would like to conclude by saying that the history behind the Twenty-First Amendment in some respects, as this Court has acknowledged in its prior holdings, is at best inconsistent, but there is one consistency that prevails throughout, and that is that it was Congress's intent upon adopting the resolution which ultimately became the Twenty-First Amendment to remove Congress from the local regulation of what was considered to be a local problem, and that is alcohol.

Thank you very much.

CHIEF JUSTICE REHNQUIST: Thank you, Mr. Tellinghuisen. The case is submitted.

(Whereupon, at 1:50 o'clock p.m,. the case in the above-entitled matter was submitted.)