What Collective Action Federalism Is and Is Not

I congratulate Ilya Somin on the arrival of Willow.  My daughters stand ready to babysit your beautiful pooch.

In this post, I will clarify the theory of collective action federalism by offering four points about what the theory is and is not.

First, collective action federalism is not a comprehensive structural account of American constitutional federalism.  For example, whatever the implications of the theory for the proper interpretation of other constitutional provisions, a collective action approach does not explain the proper scope of federal powers authorized by the enforcement clauses of the Civil War Amendments.  

The 13th, 14th, and 15th Amendments dramatically changed the balance of power between the federal government and the states by authorizing congressional regulation of the internal policy choices of the states on certain subjects regardless of collective action problems among the states.  These amendments especially aimed to grant basic constitutional rights previously denied to minority groups.  Minorities had been excluded because collective action had succeeded for the majority, not because it had failed. 

Second, collective action federalism offers a structural account of Article I, Section 8, not the institutional roles of Congress and the Court in constitutional interpretation.  Those who endorse vigorous judicial review of federalism questions will interpret collective action federalism in terms of how courts should restrain Congress.  Those who do not will interpret the framework in terms of guidance for conscientious legislators and the political safeguards of federalism.

Third, to the extent courts engage in judicial review of federalism questions, people will disagree about how judges should evaluate congressional judgments about the existence and seriousness of collective action problems, and about the adequacy of Congress’s response.  Congress can always seek to justify legislation by asserting that a collective action problem exists; that its effects are significant; and that the law it has enacted addresses the problem effectively.  The evaluative question, therefore, is what degree of proof courts should require of Congress before they will defer to its judgment.  

Collective action federalism does not resolve disagreements over this question.  The theory is compatible with multiple approaches, which reflect different views about (1) the proper extent of judicial deference to Congress in federalism cases, and (2) the actual scope of interstate externalities and impediments to interstate markets.

The most likely approach in practice, and one I endorse, reflects the prevailing view that Congress possesses very broad but not limitless authority to legislate under the various clauses of Section 8.  This belief is reflected in the interpretive principle of loose construction first articulated by Chief Justice Marshall in McCulloch v. Maryland and recently reaffirmed by a majority of Justices in United States v. Comstock, which I discuss below.  

This standard of review would charge courts with inquiring whether Congress, in passing the law under review, had a reasonable basis to believe that it was ameliorating a significant problem of collective action involving two or more states.  If reasonable people could disagree (1) about the existence of a collective action problem, (2) about the seriousness of the problem, and (3) about the efficacy of the congressional response, then courts should uphold the law.  

Congress would have to offer a plausible basis for its judgments that there is a serious multistate problem of collective action and that the law addresses the problem to a non-trivial extent.  Courts would defer to plausible findings by Congress.  Such an approach to judicial review would “cue” the political branches to take seriously those federalism questions that are worth taking seriously, but it would not license federal courts to engage in Lochner-style invalidations of many federal laws and overrulings of precedent.

Fourth, the theory of collective action federalism is neither originalist nor wholly consequentialist.  It is, rather, an account of an important part of the American constitutional structure.  The theory seeks to interpret Section 8 by drawing inferences from the relevant structures and relationships that the Constitution establishes — namely, the maintenance of a federal system that presupposes the continued existence of the states and that endows the federal government with authority to solve problems that the states cannot address effectively on their own.  Using modern economics, collective action federalism pursues a consequentialist inquiry to identify the logic of such problems and to explain how federalism can ameliorate them.   

Resolution VI and the recorded statements of influential Framers matter to the theory because such materials provide important evidence of the federalist structure that was planned; they offer illuminating evidence of how an important component of the constitutional machine was supposed to function in practice.  The Federalist Papers, for example, are relevant to my structural account even though they had little impact on the ratification debate.  

It might have turned out that this original plan for the proper interpretation of Section 8 ceased to make sense over time.  But that is not what happened regarding the distinction between individual and collective action by states; it continues to make good sense of this part of the American constitutional structure today, as modern economics helps to confirm.  Consequences matter to collective action federalism not because its structural account is instrumentalist all the way down, but because structural accounts are always in part consequentialist, regardless of how they are presented.

Collective action federalism leverages a particular view about the constitutional structure to support and critique contemporary judicial doctrine.  In my previous post, I read the Court’s modern Commerce Clause jurisprudence as sensibly reflecting the distinction between individual and collective action by states.  

Another recent example is the collective action reasoning present in United States v. Comstock.  The Court there held that the Necessary and Proper Clause authorizes the federal government to civilly commit sexually dangerous federal prisoners after the completion of their sentences if no state will accept custody.  

A state that agrees to assume custody must pay all the costs associated with commitment while other states potentially enjoy the benefits from committing the individual, who might otherwise move out of state upon release.  The Comstock Court underscored evidence that states often refuse to assume custody, potentially free riding on another state’s decision to do so.  Both the Court and Justices Kennedy and Alito stressed the relationship between the federal statute and an interstate collective action problem, which the federal government helped to create (by housing inmates in remote federal prisons for many years) and is better situated to address than the states. 

Collective action federalism is also relevant to part of the doctrinal debate over the constitutionality of the individual mandate in the Affordable Care Act.  In a new paper, I argue that the distinction between individual and collective action by states is a much better place to look for appropriate limits on the commerce power than is the distinction between inactivity and activity.  This is because the Commerce Clause is best understood in light of the collective action problems — including free rider problems — that the nation faced under the Articles of Confederation, when Congress lacked the power to regulate interstate commerce.  

One way a collective action problem arises is when people benefit from collective action regardless of whether they contribute to it.  To overcome failures to participate in collective action whose effects spill across state borders, the clauses of Section 8 authorize Congress to require many kinds of private action.

This authorization includes requiring (or, more precisely, incentivizing) financially able individuals to obtain health insurance coverage instead of attempting to self-insure or free riding on benevolence by shifting costs to others.  To the extent that such free riders are deemed inactive, their inactivity is a problem, not a reason why Congress is powerless to offer a solution.  Congress can offer a solution under the commerce power when the states are separately incompetent to solve the problem on their own because of spillover effects.  

Economic theory and empirical evidence suggest that the states are separately incompetent to solve the free rider problem that the individual mandate aims to address.  The free rider problem also illuminates the difficulty of arguing directly that the mandate infringes individual liberty.