States' Rights Issues Will Be Prominent As High Court Returns; States Seen Faring Well

WASHINGTON - The Supreme Court today opens its 1991-92 term, a session that could bring about the most sweeping protections for state autonomy since 1976.

Ever since the court ruled in National League of Cities v. Usery that the Constitution does not give Congress power to enforce federal laws "in areas of traditional government functions," states have seen their power diminished by subsequent rulings, including a 1988 decision in which the justices said the tax exemption for municipal bonds is not constitutionally protected.

But the court recently has signaled a willingness to shield states from federal encroachments, and this term it has its docket filled with cases challenging federal control over local affairs.

The court will begin the term hearing arguments in Freeman v. Pitts, a suburban Atlanta school case testing when school districts have satisfied their obligations to desegregate and can get out from under federal court supervision.

Tomorrow, it is slated to hear arguments in Cipollone v. Liggett Group Inc., a dispute over whether litigants can file state-law claims against cigarette firms despite provisions of the Federal Cigarette Labeling and Advertising Act.

In those cases and others, the court will have an opportunity to demonstrate its commitment to federalism, and some court watchers believe states will fare well.

"They seem to be moving toward a greater respect for states' rights," Charles Rothfeld, of counsel at Mayer, Brown & Platt, said of the court's justices. "In general, states are going to do better" than they have in the past.

Following the National League of Cities case, the court in 1985 reversed itself in Garcia v. San Antonio Metropolitan Transit Authority. The court said it would no longer consider state challenges to federal laws and regulations, even if state officials believed them unconstitutional. The court followed that ruling in 1988 with South Carolina v. Baker, the case about taxation of municipal bond interest.

But the pendulum began swinging back during the court's last term. Earlier this year, the court adopted what it called a "plain statement" rule in Gregory v. Ashcroft. Under that rule, the court said it will not interpret federal laws so as to preempt state authority unless the laws are unambiguous in their scope.

Further application of the plain statement rule in other cases could carve out for states broad areas of exclusive control and could result in the court directly overturning its Garcia ruling.

"Since Congress doesn't always focus very closely on what it's doing, states are going to be given quite a bit of latitude under the plain statement approach," Mr. Rothfeld said.

Vicki C. Jackson, an associate professor at the Georgetown University Law Center, said at a recent briefing on the coming term that the court's justices have shown "a renewed interest in federalism." She said that interest may result in a victory for Thomas Cipollone, who is battling cigarette manufacturers over misleading advertising.

The case tests whether the federal law requiring warning labels on cigarette packages shields manufacturers from state law damage claims.

Legal analysts said it is unclear how aggressive the court will be in directly overruling precedents. Susan Low Bloch, a Georgetown law professor, said at the briefing she would be surprised to see the court explicitly abandon previous rulings.

"I don't think there will be a substantial number of overrulings, but there may be some gutting of rulings that will still leave intact the previous decisions," she said.

David D. Cole, an associate law professor at Georgetown, concurred. "The court will chip away [at previous rulings] but say they are adhering to precedent," he said.

And Mr. Rothfeld said application of the plain statement rule may allow the court to provide safeguards for state autonomy without striking down Garcia.

Regardless of whether the court directly overturns its Garcia ruling, the justices will have ample opportunity to refine their views on federalism. In addition to the Freeman and Cipollone cases, the court also has agreed to decide: * Suter v. Artist M., a case testing whether municipal officials who violate provisions attached to federal grants may be sued under federal civil rights law; * General Motors Corp. v. Romein, a case claiming Michigan violated the federal Constitution when it retroactively increased workers' compensation benefits; and * Rufo v. Inmates of Suffolk County Jail, in which local officials claim federal courts should be more flexible when requested to dissolve consent decrees governing implementation of municipal programs.

Conservatives have long clambored for a return to basic principles of federalism, arguing that the balance of power between states and the federal government had gotten out of whack. Now that the court is solidly conservative, federalism is very much on the court's agenda - but with a twist.

"To the extent the court is going to show increasing deference to the states, you're going to get some rulings upholding some liberal policies," Mr. Rothfeld said.

While municipalities watch for court decisions that could affect the scope of their autonomy, they will also keep an eye on issues that may have a broad impact on their coffers.

The court is being asked to referee Quill Corp. v. North Dakota, a dispute over the continued viability of a 1967 Supreme Court ruling that bars states from requring out-of-state mail-order firms to collect and remit sales taxes.

A friend-of-the-court brief filed in the case by the State and Local Legal Center, a group that provides legal advice and assistance to municipalities, says states lost at least $2.2 billion in tax revenues in 1988 because of the 1967 ruling, which came in National Bellas Hess v. Department of Revenue.

The Bellas Hess ruling has cast a "shadow of uncertainty over current use tax collection efforts," which in turn has had "debilitating fiscal consequences for many states and local governments at a time when they can ill afford a loss of tax revenue," the brief says.

Most observers believe the court will agree to hear arguments in the case, providing the justices with an opportunity to clear up a murky area of law.

The court also is being asked to decide the constitutionality of California's property tax system in a case from Los Angeles, Nordlinger v. Hahn. The court's disposition of the matter could have enormous ramifications for the state, which has struggled to bring its finances into balance.

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