A defense of federalism in key state cases.

The Supreme Court this year displayed a resurgent interest in federalism as the justices for the first time in 60 years put the brakes on the power of Congress, while giving the states victories in the area of health care spending, welfare, school desegregation, prisoners' lawsuits and parole hearings. Like the new Republican majority on Capitol Hill, the talk at the Court suddenly focused anew on the proper balance of power between Washington and the states.

But the strongest assertion of support for state power came in the dissent to one of this year's notable setbacks, the 5-4 ruling that struck down the 23 state laws setting term limits for members of Congress.

"The ultimate source of the Constitution's authority is the consent of the people of each individual state, not the consent of undifferentiated people of the nation as a whole," wrote Justice Clarence Thomas, speaking for the dissenters in U.S. Term Limits vs. Thornton. "Because the people of the several states are the only true source of power, the federal government enjoys no authority beyond what the Constitution confers...As far as the federal Constitution is concerned, then, the States can exercise all powers that the Constitution does not withhold from them."

Thomas's defense of state power was signed by Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor and Antonin Scalia. The swing vote in the term limits case, Justice Anthony M. Kennedy, said he agreed that federalism is the unique feature of the American constitutional system, but he nonetheless concluded that terms for federal officeholders must be set at the national level, not by each state.

That setback for the states was offset by the remarkable ruling in U.S. vs. Lopez, which struck down the federal Gun-Free Schools Zones Act of 1990. It marked the first time since 1935 the high court has thrown out a federal law on the grounds that Congress exceeded its authority under the Commerce Clause. In recent decades, it has been repeated as a legal truism that Congress can legislate in any area where it believes doing so is in the national interest. Now, however, thanks to the Lopez ruling, that legal truism is no longer true.

"We start from first principles. The Constitution creates a federal government of enumerated powers," wrote Chief Justice Rehnquist for the 54 majority. He quoted James Madison's statement that the powers of the federal government "are few and defined," while those that "remain in the State government are numerous and indefinite."

Congress clearly has the power "to regulate Commerce ... among the several states," and that authority has been construed broadly to allow federal regulation of any activity "that substantially affects interstate commerce," the chief justice said. But that power has a limit, he added, and Congress crossed it when it decided to regulate by federal criminal law the routine act of possessing a gun near a school.

"In areas such as criminal law enforcement or education,...States historically have been sovereign," he wrote. "The possession of a gun in a local school zone is in no sense economic activity that might...substantially affect any sort of interstate commerce."

Rehnquist's opinion does not draw a clear and bright line on the reach of Congress's power, and it is not clear whether the ruling will be remembered as a one-time reminder to Congress or the beginning of a federalism trend. Unquestionably, however, the ruling will spur new legal challenges to federal laws on drug possession, abortion clinics and gun control, all areas where critics say Congress has overstepped its bounds.

OTHER CONTROVERSIAL CASES

The Court itself spoke out loudly on several other controversial subjects in its term that ended in late June. For the most part, federalism and the interests of the states fared well. Here are some of the other key rulings:

* The state may regulate hospital charges and impose surcharges on patients with commercial insurance. This 9-0 ruling in New York Blue Cross Plan vs. Travelers Insurance Co. upholds New York's system of hospital surcharges and rejects the claim that they were preempted by the federal Employee Retirement Income Security Act (ERISA). More broadly, the ruling appears to leave states with considerable flexibility to reform health care costs and to subsidize coverage for high-risk patients.

Under New York law, hospital patients with commercial insurance are charged an extra 24 percent. About half of this surcharge is retained by the hospital, and the other half turned over to the state where it subsidizes health care for the needy. In addition, because the surcharges force up the cost of private insurance, they have the effect of pushing customers into the Blue Cross and Blue Shield plans, which enroll patients who would be rejected by commercial insurers. In the past, the Court had read ERISA to preempt any "relates to" employee benefits, but it refused to do so here, asserting that it did not want to go as far as "barring any state regulation of hospital costs."

* Judges should dismiss most lawsuits filed by state prison inmates who complain about the "ordinary incidents of prison life" including being sent to solitary confinement. The 5-4 ruling in Sandin vs. Conner addresses an oft-heard complaint among state officials that frivolous lawsuits from inmates are a costly nuisance. In 1993, more than 33,000 lawsuits were filed in federal courts by state inmates, a fivefold increase since 1977. The U.S. 9th Circuit Court of Appeals in San Francisco took the view that a prison official cannot take "punitive" actions against inmates without giving them a full hearing and due process of law. Disagreeing, Chief Justice Rehnquist said punishment including separate confinement is an ordinary part of prison life and does not violate an inmate's rights.

* State lawmakers can revoke annual parole hearings for long-term inmates. The California Legislature did that in 1990 by repealing the regular parole hearings for inmates with "no reasonable" chance of gaining release. But many of these inmates had been sentenced under a previous law that gave them an annual parole review. The U.S. 9th Circuit Court said this violated the Constitution's ban on ex post facto laws. Disagreeing again, the high court in California vs. Morales said the state "did not increase the punishment" for the murderer's crime, a life sentence. It merely altered the procedures for discretionary parole hearings. Since the inmate in this case, a double murderer, had no reasonable prospect for parole, he had suffered no real loss, the court said.

* States may reduce welfare benefits by counting all the children living under one roof as a single household. The 9-0 ruling upheld a regulation in effect in California, New York and at least a half dozen other states. Before, nearly all states counted extra children taken in, for example, by an aunt and uncle, as part of a second household, entitling them to a larger monthly benefit. In California, a household with three children of one mother would receive $694 a month. But if a mother of one took in two children of a relative, she would receive $901 a month for the three children. California's regulation, which had been struck down by a lower court, was expected to save the state $20 million a year. The state "is simply recognizing the economies of scale...in such living arrangements," wrote Justice Thomas in Anderson vs. Edwards.

* Americans have a right to pass out leaflets without disclosing their names. The 7-2 decision in McIntyre vs. Ohio invalidated a $500 fine imposed on an elderly woman for passing out a flyer at a school board meeting that said, "Vote No on School Tax Levy." Since the flyer did not include her name, it violated the state disclosure law. Writing for the Court, Justice John Paul Stevens rhapsodized about the grand tradition of anonymous pamphleteering, citing as an example the authors of the Federalist Papers. But it is not clear how far the Court will extend that principle. Nearly all the states as well as the federal government have laws requiring campaign mailers and political ads to disclose who is behind them. Although the Court spoke in broad language, it later refused to hear an appeal from a California city council candidate who was fined $10,000 for sending an anonymous mailer that mocked his opponent. That action suggests the Court does not intend to disturb the many state campaign disclosure laws.

* A federal judge in Kansas City exceeded his authority when he ordered the state of Missouri to pay half the costs of a $1.3 billion upgrade of the city schools. The Constitution empowers judges to remedy acts of segregation, but "it does not give them the wholesale authority to upgrade predominantly black schools in hopes of attracting suburban whites," Chief Justice Rehnquist wrote in Missouri vs. Jenkins. Rehnquist stressed again that desegregation decrees are "intended as a temporary measure," not a grant of permanent oversight to the federal judiciary.

* States need not pay the attorneys' fees for people or groups who successfully challenge state tax laws. Had the ruling in National Private Truck Council vs. Oklahoma Tax Commission gone the other way, it would have encouraged more lawsuits attacking state tax measures. In the past, the high court has said states must refund tax money collected under a clearly unconstitutional scheme, but the truckers' council said it should also receive lawyer's fees under a federal law designed to compensate civil rights attorneys who win claims against the government. Disagreeing, a unanimous high court cited the Constitution's respect for federalism and state authority. "We have long recognized that the principles of federalism...generally counsel that the Court should adopt a hands-off approach with respect to state tax administration," wrote Justice Thomas.