Garcia v. San Antonio Metropolitan Transit Authority Donovan v. San Antonio Metropolitan Transit Authority, s. 82-1913

• Decision Date: 19 March 1984
• Docket Number: 82-1951,Nos. 82-1913,s. 82-1913
• Citation: 105 S.Ct. 1005,83 L.Ed.2d 1016,469 U.S. 528
• Parties: Joe G. GARCIA, Appellant v. SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY et al. Raymond J. DONOVAN, Secretary of Labor, Appellant v. SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY et al
• Court: U.S. Supreme Court

469 U.S. 528

105 S.Ct. 1005

83 L.Ed.2d 1016

Joe G. GARCIA, Appellant

v SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY et al.

Raymond J. DONOVAN, Secretary of Labor, Appellant

v. SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY et al.

Nos. 82-1913, 82-1951.

Argued March 19, 1984.

Reargued Oct. 1, 1984.

Decided Feb. 19, 1985.

Rehearing Denied April 15, 1985.

See 471 U.S. 1049, 105 S.Ct. 2041.

Syllabus

Appellee San Antonio Metropolitan Transit Authority (SAMTA) is a public mass-transit authority that is the major provider of transportation in the San Antonio, Tex., metropolitan area. It has received substantial federal financial assistance under the Urban Mass Transportation Act of 1964. In 1979, the Wage and Hour Administration of the Department of Labor issued an opinion that SAMTA's operations are not immune from the minimum-wage and overtime requirements of the Fair Labor Standards Act (FLSA) under National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245, in which it was held that the Commerce Clause does not empower Congress to enforce such requirements against the States "in areas of traditional governmental functions." Id., at 852, 96 S.Ct., at 2474. SAMTA then filed an action in Federal District Court, seeking declaratory relief. Entering judgment for SAMTA, the District Court held that municipal ownership and operation of a mass-transit system is a traditional governmental function and thus, under National League of Cities, is exempt from the obligations imposed by the FLSA.

Held: In affording SAMTA employees the protection of the wage and hour provisions of the FLSA, Congress contravened no affirmative limit on its power under the Commerce Clause. Pp. 537-557.

(a) The attempt to draw the boundaries of state regulatory immunity in terms of "traditional governmental functions" is not only unworkable but is also inconsistent with established principles of federalism and, indeed, with those very federalism principles on which National League of Cities purported to rest. That case, accordingly, is overruled. Pp. 537-547. .

(b) There is nothing in the overtime and minimum-wage requirements of the FLSA, as applied to SAMTA, that is destructive of state sovereignty or violative of any constitutional provision. The States' continued role in the federal system is primarily guaranteed not by any exter- nally imposed limits on the commerce power, but by the structure of the Federal Government itself. In these cases, the political process effectively protected that role. Pp. 547-555.

557 F.Supp. 445, reversed and remanded.

Sol. Gen. Rex E. Lee, Washington, D.C., for appellant in No. 82-1951.

Laurence Gold, Washington, D.C., for appellant in No. 82-1913.

William T. Coleman, Jr., Washington, D.C., for appellees in both cases.

Justice BLACKMUN delivered the opinion of the Court.

We revisit in these cases an issue raised in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). In that litigation, this Court, by a sharply divided vote, ruled that the Commerce Clause does not empower Congress to enforce the minimum-wage and overtime provisions of the Fair Labor Standards Act (FLSA) against the States "in areas of traditional governmental functions." Id., at 852, 96 S.Ct., at 2474. Although National League of Cities supplied some examples of "traditional governmental functions," it did not offer a general explanation of how a "traditional" function is to be distinguished from a "nontraditional" one. Since then, federal and state courts have struggled with the task, thus imposed, of identifying a traditional function for purposes of state immunity under the Commerce Clause.

In the present cases, a Federal District Court concluded that municipal ownership and operation of a mass-transit system is a traditional governmental function and thus, under National League of Cities, is exempt from the obligations imposed by the FLSA. Faced with the identical question, three Federal Courts of Appeals and one state appellate court have reached the opposite conclusion.¹ Our examination of this "function" standard applied in these and other cases over the last eight years now persuades us that the attempt to draw the boundaries of state regulatory immunity in terms of "traditional governmental function" is not only unworkable but is also inconsistent with established principles of federalism and, indeed, with those very federalism principles on which National League of Cities purported to rest. That case, accordingly, is overruled.

I

The history of public transportation in San Antonio, Tex., is characteristic of the history of local mass transit in the United States generally. Passenger transportation for hire within San Antonio originally was provided on a private basis by a local transportation company. In 1913, the Texas Legislature authorized the State's municipalities to regulate vehicles providing carriage for hire. 1913 Tex.Gen.Laws, ch. 147, § 4, ¶ 12, now codified, as amended, as Tex.Rev.Civ.Stat.Ann., Art. 1175, §§ 20 and 21 (Vernon 1963). Two years later, San Antonio enacted an ordinance setting forth franchising, insurance, and safety requirements for passenger vehicles operated for hire. The city continued to rely on such publicly regulated private mass transit until 1959, when it purchased the privately owned San Antonio Transit Company and replaced it with a public authority known as the San Antonio Transit System (SATS). SATS operated until 1978, when the city transferred its facilities and equipment to appellee San Antonio Metropolitan Transit Authority (SAMTA), a public mass-transit authority organized on a countywide basis. See generally Tex.Rev.Civ.Stat.Ann., Art. 1118x (Vernon Supp.1984). SAMTA currently is the major provider of transportation in the San Antonio metropolitan area; between 1978 and 1980 alone, its vehicles traveled over 26 million route miles and carried over 63 million passengers.

As did other localities, San Antonio reached the point where it came to look to the Federal Government for financial assistance in maintaining its public mass transit. SATS managed to meet its operating expenses and bond obligations for the first decade of its existence without federal or local financial aid. By 1970, however, its financial position had deteriorated to the point where federal subsidies were vital for its continued operation. SATS' general manager that year testified before Congress that "if we do not receive substantial help from the Federal Government, San Antonio may . . . join the growing ranks of cities that have inferior [public] transportation or may end up with no [public] transportation at all." ²

The principal federal program to which SATS and other mass-transit systems looked for relief was the Urban Mass Transportation Act of 1964 (UMTA), Pub.L. 88-365, 78 Stat. 302, as amended, 49 U.S.C.App. § 1601 et seq., which provides substantial federal assistance to urban mass-transit programs. See generally Jackson Transit Authority v. Transit Union, 457 U.S. 15, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982). UMTA now authorizes the Department of Transportation to fund 75 percent of the capital outlays and up to 50 percent of the operating expenses of qualifying mass-transit programs. §§ 4(a), 5(d) and (e), 49 U.S.C.App. §§ 1603(a), 1604(d) and (e). SATS received its first UMTA subsidy, a $4.1 million capital grant, in December 1970. From then until February 1980, SATS and SAMTA received over $51 million in UMTA grants—more than $31 million in capital grants, over $20 million in operating assistance, and a minor amount in technical assistance. During SAMTA's first two fiscal years, it received $12.5 million in UMTA operating grants, $26.8 million from sales taxes, and only $10.1 million from fares. Federal subsidies and local sales taxes currently account for about 75 percent of SAMTA's operating expenses.

The present controversy concerns the extent to which SAMTA may be subjected to the minimum-wage and overtime requirements of the FLSA. When the FLSA was enacted in 1938, its wage and overtime provisions did not apply to local mass-transit employees or, indeed, to employees of state and local governments. §§ 3(d), 13(a)(9), 52 Stat. 1060, 1067. In 1961, Congress extended minimum-wage coverage to employees of any private mass-transit carrier whose annual gross revenue was not less than $1 million. Fair Labor Standards Amendments of 1961, §§ 2(c), 9, 75 Stat. 65, 71. Five years later, Congress extended FLSA coverage to state and local-government employees for the first time by withdrawing the minimum-wage and overtime exemptions from public hospitals, schools, and mass-transit carriers whose rates and services were subject to state regulation. Fair Labor Standards Amendments of 1966, §§ 102(a) and (b), 80 Stat. 831. At the same time, Congress eliminated the overtime exemption for all mass-transit employees other than drivers, operators, and conductors. § 206(c), 80 Stat. 836. The application of the FLSA to public schools and hospitals was ruled to be within Congress' power under the Commerce Clause. Maryland v. Wirtz, 392 U.S. 183, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968).

The FLSA obligations of public mass-transit systems like SATS were expanded in 1974 when Congress provided for the progressive repeal of the surviving overtime exemption for mass-transit employees. Fair Labor Standards Amendments of 1974, § 21(b), 88 Stat. 68. Congress simultaneously brought the States and their subdivisions further within the ambit of the FLSA by extending FLSA coverage to virtually all state and local-government employees. §§ 6(a)(1) and (6), 88 Stat. 58, 60, 29 U.S.C. §§ 203(d) and (x). SATS complied with the FLSA's overtime requirements until 1976, when this Court, in National League of Cities, overruled Maryland v. Wirtz, and held that the FLSA could not be applied constitutionally to the "traditional governmental functions" of state and local...