In the wake of the Attorney General of Michigan flexing her political muscle, as reported elsewhere in this issue, it again is time to put the dilemma of state versus federal power into perspective. The fact is that the Internet in the last few years has placed our entire system of government in the midst of a dilemma. After all, there are 49 other attorneys general waiting in the wings, not to mention thousands of cities, counties, and villages, all seeking to meddle with the Internet for political gain. But first, a quick history and civics refresher.
Here in the United States, we have a peculiar system of government - or governments, to be more precise. Like most countries, our government is a product of history, beginning with the "Miracle at Philadelphia." Fifty-five delegates from 12 of the 13 states converged on Philadelphia in 1787 in an effort to make organization out of the chaos that arose largely from the conflict between states being dependent upon slavery and those against it, and coupled with the states' ethnic and numerous cultural differences. There plainly was a need for a solid central government, but also a demand for state autonomy, particularly because of the slavery issue.
The resulting Constitution provided for a very limited federal government. Indeed, the laws that the Constitution empowered Congress to enact were limited to those necessary to a meaningful central government. If it has been a while since you looked at it, Article I, section eight of the Constitution enumerates the significantly limited powers of Congress: to tax, borrow, control currency, regulate patents and copyrights, raise armies and declare war, regulate interstate and foreign commerce, supervise immigration, and a few other housekeeping items. And the Bill of Rights - the first ten amendments to the Constitution that effectively were part and parcel of the original deal - expressly limit the power of the federal government, including the Ninth and Tenth Amendments that reserve powers not enumerated in the Constitution to the states and the people.
The Civil War and the ensuing constitutional amendments settled the slavery issue (at least on paper), and the Industrial Revolution began to shrink the country. The Industrial Revolution made plain the dilemma created by a constitution that was written in the context of a sparsely populated union of diverse states that did not interact very much. The 1790 census counted less than four million people; the most populous state, Pennsylvania, with a shade over 400,000 residents. By 1870, New York alone had over four million, and the total population was approaching 40 million. The population had increased more than ten-fold, the number of states had increased from 13 to 38, and technology was beginning to shrivel the country.
The constitutional model of a few, loosely organized states was challenged by the Industrial Revolution and the advent of railroads, trucks, automobiles, and airplanes. By the time of the Great Depression, interstate commerce had become the rule, rather than the exception.
Oddly enough, it was Depression-era Supreme Court decisions that effected a mid-course correction, adapting the Constitution to the ever-shrinking country by dramatically expanding the power of Congress to regulate interstate commerce. The classic understanding of Congress' power to regulate interstate and foreign commerce involved only transportation of goods to another state or to a foreign country. During the Twentieth Century, the Supreme Court increased the scope of the Commerce Power so as to allow federal regulation of any commercial activity that even affects interstate commerce. Because by that time it had become impossible to engage in any commercial activity that did not affect interstate commerce, the federal government was effectively empowered to regulate most any category of commercial transaction.
However, because Congress historically had regulated only transactions that involved purely interstate or foreign commerce, a bewildering system of federal regulation arose. For example, interstate long-distance telephone rates were subject to federal regulation but intrastate rates were not; interstate trucking was subject to federal regulation but intrastate shipping was not. But the Supreme Court's expansion of the scope of the Commerce Clause at least allowed the federal government to establish consistency in commercial transactions.
In many ways, however, the federal government has fallen short. For example, it has been necessary for organizations of legal scholars to draft uniform laws for the states to enact so as to afford national consistency in commerce - the Uniform Commercial Code, Uniform Limited Partnership Act, Uniform Trade Secrets Act, and so on. Unfortunately, however, uniform acts are the exception rather than the rule. For example, there is a Uniform Deceptive Trade Practices Act that has been adopted in only seven states. Thus, whether a given trade practice is deceptive is subject to the laws of all 50 states, only seven of which are the same, atop a battery of federal laws and the regulations of the Federal Trade Commission.
In a brick-and-mortar world, this crazy-quilt of local laws was manageable. That is no longer the case with the Internet as the dominant force of commerce. The federal government has dramatically failed to force uniformity in commercial law. Close to the hearts of readers of this magazine is, for example, its failure to definitively regulate SPAM in a way that trumps the power of state and local governments to do so (see "Advertising and Spam," July 2002).
One good example of the federal government creating needed uniformity of commercial laws is in the Copyright Act. It is difficult enough for a copyright owner to protect his or her rights with the blurring of international borders. Imagine having to register copyrights in all 50 states! Thankfully, the Copyright Act of 1976 expressly excluded the states from the copyright business based upon the enumerated congressional power "to promote... the useful arts."
As to other commercial endeavors, however, America is seriously handicapped by a hodgepodge of local regulations. Not only are there state regulations with which to contend, but states also authorize their counties, cities, villages, townships, and boroughs to enact, in varying degrees, regulations of commercial activities. The resulting regulations, you must remember, emanate from groups of individuals whose only common talent is the ability to win popular elections and, for the most part, whose only common interest is garnering votes in an upcoming election.
This all brings us to Michigan. The following are some obscure facts about Michigan of which, unless you live there, you probably were unaware:
State Bird - Robin.
State Flower - Apple Blossom.
State Tree - White Pine.
State Attorney General - Jennifer M. Granholm.
In November of 1988, Jennifer M. Granholm was elected Michigan Attorney General. On Aug. 27, 2002, she issued a press release announcing her campaign assailing Internet billing companies, as detailed elsewhere in this issue (see p.xx). Does it surprise you to learn that she will be the Democratic candidate for governor on the Nov. 5 ballot?
The NAAG is an organization of which Ms. Granholm is a member, and likely a proud one. It calls itself the National Association of Attorneys General, but often is accurately dubbed the "National Association of Aspiring Governors" because most attorneys general want to find their ways to their governor's mansion and beyond. John Ashcroft is one such politician; he was the NAAG chair, later Missouri governor and now Attorney General of the United States.
Ms. Granholm's "Operation No-Lita" against child pornography on the Internet, culminating in her recent assault on third-party processors, probably garnered her many photo opportunities. If you don't think this is politics, consider this: If third-party processors were facilitating propagation of child pornography, what about VISA and MasterCard? Nope; gubernatorial candidates don't want to hurt those nice banks, do they?
There is nothing wrong with attacking child pornography in an appropriate way. That isn't the issue here. Rather, it amounts to this: If Ms. Granholm is so devoted to bringing about the power of the Michigan Attorney General to eradicate child pornography, why is she running for governor rather than another term as Attorney General? She qualifies for one more under Michigan's term-limits law.
Granholm is behaving in a manner typical of industrious local politicians - the city council member aspiring to be mayor; the mayor aspiring to be a state senator; the state senator aspiring to run for Congress; and so on. And, like Ms. Granholm, those folks can harvest great political mileage by doing anything dealing with sex ... because the press loves it.
The product of this political phenomenon is that politicians in state, county, city, village, and township governments, all seeking to appear in Monday morning's paper - above the fold - are forever wanting a new crackdown on sex, which presently is most prevalent on the Internet. And even if their intentions were always bona fide - which rarely is the case - the result is the disastrous lack of uniformity in regulation of the commerce in general, and the Internet in particular.
One place where the federal government has done the right thing is its moratorium on taxation of electronic commerce in the Internet Tax Freedom Act. This law prevents local taxation of the Internet. Why not also the Internet Regulation Freedom Act? While, under what is called the dormant Commerce Clause, some courts have struck down some state Internet regulations, other courts - most notably in California - have declined to embrace that rule. Compare American Libraries Ass'n. v. Pataki, 969 F.Supp. 160 (S.D.N.Y. 1997) with Hatch v. Superior Court (People) , 80 Cal.App.4th 170, 94 Cal.Rptr.2d 453 (4th Dist. 2000). The legal concept is that the express power of Congress to regulate interstate and foreign commerce automatically trumps any state regulation of the Internet, and Congress should enact a law embracing the majority view that states cannot regulate the Internet.
The proclivities of local politicians to enact laws that get them attention cry out for a federal law stopping the emerging avalanche of local regulations of the Internet. Like the federal law prohibiting local governments from taxing the Internet to death, one prohibiting them from regulating it to death is needed as well.
Watch Jennifer campaign!
Clyde DeWitt is a partner in the Los Angeles, California-based national law firm of Weston, Garrou & DeWitt. He can be reached through AVN Online's offices, at his office at 12121 Wilshire Boulevard, Suite 900 Los Angeles, CA 90025 or over the Internet at [email protected]. Readers are considered a valuable source of court decisions, legal gossip and information from around the country, all of which is received with interest. Books, pro and con, are encouraged to be submitted for review, but they will not be returned. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
