Federalism

I. Meaning and History

At the end of World War II, the tax base in America had expanded to include some eighty-six
percent of the workforce. The nation was wealthy and gaining a social conscience relative to
civil and individual rights. Again, the best way to ensure that “national priorities” received
national attention was through the exercise of power on the part of Congress. Having gained
traction during the depression years, federal grants-in-aid became a major mechanism for
ensuring these national priorities were accomplished. To fully implement these social programs,
however, Congress required the cooperation of state and local governments. This governance
arrangement, fully documented by Martin Grodzins and Daniel Elazar, became known as
Cooperative Federalism.1 The principal assumption of Cooperative Federalism was that the role
of each level of government was agreed upon through a negotiation process. Grodzins’ notion –
that American federalism was never a layer cake (dual federalism) but rather a marble cake
where all levels of government are required to cooperate on all matters of national interest –
seemed appropriate. Elazar, in advancing the theory of Cooperative Federalism, articulated the
virtues of such arrangements, particularly for solving the issues of the time.

Doubts about the ability of the central government to correct the spillovers and externalities
efficiently have led to the formulation of an alternative paradigm – ‘cooperative federalism’ –
that accords primacy to lower tier governments in providing public services over a wider area
than economic federalism would favour.2 As an operational rule, cooperative federalism
contemplates the most decentralized structure of government capable of internalizing all
economic externalities, with a constitutional stipulation that all central government policies are
agreed to unanimously by elected representatives from each of the lower tier governments.
Drawing on the theory of surplus sharing through bargaining propounded by Coase, 3 referred to
earlier in the context of the discussion on the confederate republic, proponents of ‘cooperative
federalism’ argue that unanimously approved central government policies based on agreements
achieved through ‘bargaining’ (with gainers agreeing to compensate losers) will probably be
1

3
Coase, Ronald (1960): ‘The Problem of Social Cost’, Journal of Law and Economics 3.
‘Pareto-improving’. Cooperative federalism confines the function of the central government only
to the tasks of encouraging and enforcing inter-jurisdictional contracts to provide pure public
goods and correct the failings of fiscal competition among governments at the lower levels. 4 Can
such an arrangement be effective?

Weaknesses of expectations regarding the efficacy of bargaining in arriving at successful

outcomes have been noted already and are not repeated here. It may only be added that
enforcement of agreements also can pose problems. After all, the ultimate sanction behind
enforcement of agreements which are supposed to be legally binding is military action by the
centre and that is rarely resorted to by any central government. Given this reality, there is always
a tendency to renege on agreements on the part of the constituents. The fate of agreements
reached at the National Development Council of India regarding minimum charges for electricity
supplied to farmers by the state electricity enterprises is a case in point. There are not many
parallels in other federations of the action taken by the federal government in US in the 1960s to
enforce with military backing, the Supreme Court ruling negating discrimination against blacks
in admission to schools.5

Looking at the performance of cooperative federalism in providing public goods and

controlling inter-community externalities,6 conclude “the overall record has not been
impressive”. Fully efficient outcomes are not achieved through agreements even when the
jurisdictions are few. The collapse of confederacy in Yugoslavia in the 1980s provides an
example.7 The US Constitution itself, it is said, is a testimony to the failure of the Articles of on
federation to achieve agreement among the States in crucial matters like financing the defence of
the newly independent States. The other major expenditure activity of the federal government in
US, viz, nationally provided ‘social insurance’ is also cited as an instance of federal response to
the failure of the states to address the unemployment problem cooperatively.

4
Inman, Robert P and Daniel L Rubinfeld, (1997): ‘Rethinking Federalism’, Journal of Economic Perspectives, Vol
II, November 4.
5
Amaresh Bagchi, ‘Rethinking Federalism’ Overview of Current Debates with Some Reflections in Indian Context’,
EPW
6
Supra Inman, Robert P and Daniel L Rubinfeld, (1997): ‘Rethinking Federalism’, Journal of Economic
Perspectives, Vol II, November 4.
7
Mihaljek (1993): Fiscal Reform in Yugoslavia, in
Tanzi (ed).
 Macroeconomic management is another area, where it is widely believed, cooperative
federalism can pose problems. The fact that the responsibility is universally regarded as best
entrusted to a central authority reflects the recognition of the limitations of Coasian bargaining
among constituents. Of course, the compulsion for centralising this responsibility arises in part
from the limitations of small open economies to pursue policies of effective aggregate demand
management, but primarily it is the nature of the function that predicates its centralisation. The
emergence of the European Monetary Union too corroborates this prognosis.

Critics of cooperative federalism think it is wanting also in addressing the task of

coordination of intergovernmental fiscal relations under a decentralised system in another vital
respect. In the absence of an effective mechanism as safeguard, coordination failures, it is
argued, induce sub-national governments to spend inefficiently and beyond their means when
fiscal policy is designed and implemented in a decentralised fashion. 8 In fact, one of the
arguments put forward as a drawback of decentralisation is that a decentralised government
structure is incompatible with prudent fiscal management.9

This view is however, contested on the argument that decentralised fiscal systems have a
greater potential for better macroeconomic governance than centralized system, by virtue of the
fact that decentralized systems call for greater clarity in the roles of the various centres of
decision making and transparency in the rules that govern their interaction to ensure a fair play. It
all depends on how the fiscal transfers are designed and the rules of fiscal behaviour are framed
and implemented.

All in all, the verdict of Inman and Rubinfeld on ‘cooperative federalism’, like on the
concept of confederate republic is severely critical. Historical and contemporary evidence, they
observe, do not provide much support for the claim that lower tier governments can solve their

8
De Mello, Luiz (1999): ‘Intergovernmental Fiscal Relations: Coordination Failures and Fiscal Outcomes’, Public
Finance and Budgeting, spring.
9
Prud’homme, Remy (1995): ‘On the Dangers of Decentralisation’, The World Bank Research Observer, August.;
See Also Tanzi, Vito (1993): Transition to Market: Studies in Fiscal Reform, Washington, DC: IMF. (1996): ‘Fiscal
Federalism and Decentralisation: A Review of Some Efficiency and Macroeconomic Aspects’, Annual World Bank
Conference on Development Economics, 1995.
important collective action problems on their own through unanimous Coasian agreements. “If
economic federalism seems too biased in favour of centralisation, cooperative federalism in their
view seems to bias the fiscal constitution too far in the other direction”.

In the New Deal era10, cooperative federalism was best exemplified by federal grant-in-
aid programs that encouraged state governments to implement programs funded by the national
congress. Instead of imposing a program nationally, the federal government offered significant
financial resources to entice each state to implement and administer the program locally.

______________________

10
The New Deal was a series of social, economic and governmental reforms initiated from 1933 to 1938 by the
administration of US president Franklin Delano Roosevelt in response to the Great Depression.
 II. The Swinging Dilemma of Cooperative and Uncooperative Federalism

Public law scholars and social scientists have long paid attention to cooperative
federalism, but constitutional theory has been slow to absorb these insights. 11 It has instead been
modeled on the idea that states enjoy power by virtue of having an exit option, the ability to
regulate separate and apart from the national government.12 This vision of state power shared by
process federalists and sovereignty types alike-turns on autonomy and separateness rather than
interdependence and integration, which are the hallmarks of cooperative federalism.13
Constitutional theory rests on the assumption that federalism is intended to give states regulatory
power over their own domains;14 cooperative federalism, in sharp contrast, features a powerful
national government with its finger in every pie and states wielding power that is not their own. 15
Constitutional theory emphasizes the importance of preserving an exit option for the states;
cooperative federalism turns states into insiders, not outsiders.16 As a result, constitutional law
scholars have not just neglected cooperative federal regimes-some have gone so far as to
question whether such regimes can be properly classified as federalism in the first place.17

Because of this neglect, constitutional theory lacks the tools it needs to analyze
cooperative federal regimes. In these administrative structures, states are servants, not sovereigns
or even autonomous entities.18 States are not presiding over their own empires; they are
administering someone else's. Even in the areas in which, at first glance, states seem to enjoy a

11
See Heather K. Gerken, Foreword: Federalism All the Way Down, 124 HARV. L. REV. 4 (2010); Randy E.
Barnett, Three Federalisms, 39 LOY. U. CH. L.J. 285 (2008); Erwin Chemerinsky, The Assumptions of Federalism,
58 STAN. L. REV. 1763, 1766-69 (2006); Frank
B. Cross & Emerson H. Tiller, The Three Faces of Federalism: An Empirical Assessment of Supreme Court
Federalism Jurisprudence, 73 S. CAL. L. REV. 741, 744 (2000); Byron Dailey, The Five Faces ofFederalism:A
State-Power Quintet Without a Theory, 62 OHIO ST. L.J. 1243 (2001); Deborah Jones Merritt, Three Faces of
Federalism: Finding a
Formula for the Future, 47 VAND. L. REV. 1563 (1994); For a comparative view, see Koen Lenaerts,
Constitutionalism and the Many Faces ofFederalism,38 AM. J. COMP. L. 205 (1990).
12
Id. at 7
13
Id.
14
Id.
15
Id. at 19
16
Id. at 14
17
See, e.g., Rubin & Feeley, supra note 51, at 944. But see Jackson, supra note 18, at 2219 ("A federal system
might simply provide for the existence of two levels of government, with independently elected leaderships, in
which the national-level government had plenary legislative jurisdiction and the subnational level had principal
administrative responsibilities.").
18
See Heather K. Gerken, Foreword: Federalism All the Way Down, 124 HARV. L. REV. 4 (2010)
robust form of autonomy, in fact they are often regulating in the microspheres left open by
federal law.19

Recently, a small but burgeoning group of scholars has begun to argue that constitutional
theory requires new conceptual tools to analyze cooperative federal regimes. 20 Much of this work
emphasizes the ways in which cooperative federal regimes promote the same aims as federalism
even though the power states wield looks nothing like the model that dominates constitutional
theory. Just as constitutional theorists argue that an exit option allows states to serve as
laboratories of democracy, sources of innovation, and regulatory rivals, scholars have recently
pointed out that joint regulation can promote mutual learning, healthy competition, and useful
redundancy.21 It has thus limned the ideas that make up the other half of constitutional theory-
those that emphasize the role that states can play in shaping identity, promoting democracy,
and diffusing power.22

Let me provide several examples in which the dominance of the exit paradigm-the notion
of state power that runs through both the sovereignty model and process federalism-has limited
our intellectual resources for working through a set of problems that often arise in the context of
federalism debates. The first goes to the oft-stated claim that one of the purposes of federalism is
to check the national government. 23 Indeed, it is commonplace to argue that national power is
diffused in two ways, one horizontal and one vertical.

But there is a curious difference between the ways we understand these institutional
arrangements. At the horizontal level, we have long had two competing theories about how to
check a government.24 The first, separation of powers, depends on autonomy and independence.
Power is diffused by having institutional actors swim in their own lanes and carry out policy in
their own independent spheres. The second, checks and balances, depends on integration and

19
Heather K. Gerken, Of Sovereigns and Servants, 115 YALE L.J. 2633, 2634 (2006); see also Jessica Bulman-
Pozen & Heather K. Gerken, Uncooperative Federalism, 118 YALE L.J. 1256, 1265 (2009).
20
See Heather K. Gerken, Foreword: Federalism All the Way Down, 124 HARV. L. REV. 4 (2010)
21
Id. at 20
22
Id.
23
Id.
24
Id.
interdependence. Power is diffused by creating a messy structure of overlapping institutions that
depend on one another to get anything done.

One model dominates the debate on the vertical diffusion of power: the exit account
endorsed by process federalists and sovereignty types alike.25 This exit account is the natural
cognate to the separation of powers. Both turn on the notion that power diffusion hinges on
independence, not interdependence. And both turn on formal accounts of separate policymaking
spheres. Both envision power as the ability to control one's own empire. Both tend to focus on
who gets to play the trump card when the center and periphery tussle-when the trick is to figure
out who possesses which power, and the game ends when the trump card is played.

Absent from federalism theory is a fully theorized competing approach, the cognate to the
checks-and-balances model. We do not think of voice-not even the muscular form of voice that
allows for rebellious state policymaking-as a strategy for checking the national government. That
is true even though the states and the federal government are often as integrated as the three
branches. And yet we continue to emphasize federalism's hierarchical dimensions rather than
imagining federal-state relations as we do the relations between the three branches-as a system
that mixes conflict and cooperation to produce governance.

If we imagine states checking the center by exercising a muscular form of voice-

challenging and resisting federal law from within rather than making policy outside of it-the
salience of the checks-and-balances model becomes evident. As with the checks-and-balances
model,26 an account of federalism oriented around voice would suggest that power relations are
contingent and fluid, so debates over jurisdicitional lines are, in some senses, beside the point. 27
And the inquiry does not end-as it does with an exit account of federalism and the separation of

25
See supra text
26
Cf. Peter L. Strauss, The Place of Agencies in Government: Separation of Powers and the Fourth Branch, 84
CoLUm. L. REV. 573, 603 (1984) ("The imprecision inherent in the definition and separation of the three
governmental powers contributes to the tensions among them.").
27
Alex Aleinikoff and Robert Cover begin with a very different example-federal-state interactions in the habeas
context-but propose a similar conception of federalism, one "premised upon conflict and indeterminacy ... in which
neither system can claim total sovereignty." Robert M. Cover & T. Alexander Aleinikoff, Dialectical Federalism:
Habeas Corpus and the Court, 86 YALE L.J. 1035, 1048 (1977).
powers28-with the conclusion that one institution gets to trump another. 2930 Co-governance is
instead the model: an ongoing, iterated game in which what matters is how the two institutions
partner with one another. The key is not to figure out who wins but to figure out how to maintain
a healthy tension between state and national institutions.

Just to ground this a bit more, let me give a concrete example of the potential payoff
associated with thinking in these terms. There is a seemingly endless debate on how to strike the
balance of power between the states and federal government. Those who worry about state power
almost invariably propose an exit option: enlarging the policymaking empires over which states
preside. And although some-like the dissenters in the anticommandeering cases 31 -invoke the
interests of the state in challenging an exit-like solution, they do not even have a vocabulary to
make that claim, let alone a familiar set of arguments to rehearse. In Printz v. United States32 and
New York v. United States,33 for instance, the majority drew upon a deeply intuitive, historically
rooted argument about the value of sovereignty, of preserving an exit option for the states.While
the dissenters were feeling their way around some of the arguments I have discussed, they made
those arguments piecemeal instead of drawing upon a well-established doctrinal analogue like
checks and balances in making their case.34

Here is another example in which constitutional theory has missed an important insight
due to its neglect of cooperative federalism. Scholars have argued that the separation of powers

28
Cf. ROBERT A. SCHAPIRO, POLYPHONIC FEDERALISM: TOWARD THE PROTECTION OF
FUNDAMENTAL RIGHTS 94 (2009) ("Dualist federalism is a zero sum game, a battle over territory that demands
a victor.").
29
Martin S. Flaherty, The Most Dangerous Branch, 105 YALE L.J. 1725, 1736 (1996) (arguing that the checks-and-
balances approach simply focuses on "maintaining a basic equilibrium among the branches" rather than on
allocating particular powers to particular branches); cf. Strauss, supra note 80, at 604 (arguing that the checks-and-
balances approach reflects "a process not an institution, with impermanence of resolution not only inevitable but
desirable as an outcome").
30
Cf. ROBERT A. SCHAPIRO, POLYPHONIC FEDERALISM: TOWARD THE PROTECTION OF
FUNDAMENTAL RIGHTS 94 (2009) ("Dualist federalism is a zero sum game, a battle over territory that demands
a victor.").
31
See, e.g., Printz v. United States, 521 U.S. 898, 943 (1997) (Stevens, J., dissenting) ("There can be no conflict
between ... duties to the state and those owed to the Federal Government because Article VI unambiguously
provides that federal law 'shall be the supreme Law of the Land,' binding in every state.").
32
Id. at 918-19 (majority opinion).
33
505 U.S. 144, 156 (1992).
34
See, e.g., Printz, 521 U.S. at 946-47 (Stevens, J., dissenting).
safeguards federalism.35 But no one has thought to argue the reverse. That is unsurprising given
the dominance of the exit model in federalism debates. Within constitutional theory, states are
simply understood to be outside of the national system and thus irrelevant to the distribution of
power among the three branches of the federal government.36

Jessica Bulman-Pozen, however, has recently argued that in cooperative federal regimes,
states can play an important role in maintaining the balance of power and checking a too-
powerful executive branch.37 Because states help administer federal policy, they can serve as
"champions of Congress, both relying on congressionally conferred authority and casing
themselves as Congress's faithful agents.38 As Bulman-Pozen observes, “when we turn our
attention to cooperative federalism, the distinctive way states foster the separation of powers
becomes visible. Cohabitating a statutory scheme with the federal executive, states challenge not
the raw exercise of federal power, as traditional accounts of federalism would have it, but rather
the faithfulness of the executive to the statutory scheme”. 39 It is not just constitutional theory that
would benefit from greater attention to cooperative federalism. Consider the work of Abbe Gluck
in the field of legislation.40 Whereas the work described above concerns the distribution of power
between the states and federal government, Gluck's work attends to the interpretive questions
that arise in cooperative federal regimes. For instance, in Intrastatutory Federalism and
Statutory Interpretation: State Implementation of Federal Law in Health Reform and Beyond,
35
Brad Clark, for instance, claims that the Supremacy Clause and the separation of powers promote state autonomy
because they limit the federal government's reach. See Clark, supra note 15, at 1681; Bradford R. Clark, Separation
of Powers as a Safeguard of Federalism, 79 TEX. L. REV. 1321, 1323 (2001) [hereinafter Clark, Separation of
Powers]; Bradford R. Clark, The Supremacy Clause as a Constraint on Federal Power, 71 GEO. WASH. L. REV.
91, 92 (2003) [hereinafter Clark, Supremacy Clause]. Stephen Gardbaum similarly argues that federalism should be
based "not on policing definitive and categorical jurisdictional boundaries ... but on policing Congress's deliberative
processes and its reasons for regulating." Stephen Gardbaum, Rethinking Constitutional Federalism, 74 TEx. L.
REV.
795, 799 (1996). So too, Vicki Jackson eschews separate spheres but still favors policing limits on federal power.
Vicki C. Jackson, Federalism and the Uses and Limits of Law: Printz and Principle?, 111 HARV. L. REV. 2180,
2231 (1998). "To make political safeguards of federalism work," she writes, "some sense of enforceable lines must
linger." Id. at 2228; see also id. at 2233, 2255. Some argue that the Court has adopted a similar approach. See David
J. Barron, Fighting Federalism with Federalism: If It's Not Just a Battle Between Federalists and Nationalists,
What Is It?, 74 FORDHAM L. REV. 2081, 2096 (2006).
36
See Heather K. Gerken, Foreword: Federalism All the Way Down, 124 HARV. L. REV. 4 (2010)
37
See Jessica Bulman-Pozen, Federalism as a Safeguard of the Separation of Powers, 112 COLUM. L. REV.
38
Id. (manuscript at 3).
39
Id.
40
See Abbe R. Gluck, Intrastatutory Federalism and Statutory Interpretation: State Implementation of Federal Law
in Health Reform and Beyond, 121 YALE L.J. 534 (2011) (canvassing the many forms of federalism that can be
found in the Patient Protection and Affordable Care Act).
Gluck argues that legislation theory and doctrine have simply neglected the fact that "[e]very
branch of state government is ... in the midst of creating, implementing and interpreting federal
statutory law.41 As a result of this neglect, writes Gluck, "we have virtually no doctrines or
theories that acknowledge, much less account for, the role of state implemented in the
hermeneutical project of federal statutory construction," nor "do we have any doctrines that
recognize, much less negotiate, the relationship between state and federal agencies" with
concurrent authority.42
Gluck's work on cooperative federalism even offers a potential lesson for constitutional
theory. Adam Cox has argued that the best explanation for the Court's anticommandeering rule is
as an expressive norm, one that “preserv[es] and reinforc[es] public perception of the states as
credible alternative political institutions”.43 Interestingly, Gluck sees expressive dimensions in
cooperative regimes, which arguably fall at the other end of the state power spectrum. She argues
that federal regimes that allow for both state run and federal-run programs have expressive
dimensions because they acknowledge the states' traditional role in regulating in a policy arena
even as the federal government moves into it.44 In this way, she claims, these schemes can be
both "boundary shifting" and "federalism respecting."45

What is noteworthy about all of this work is how recent it is. Cooperative federalism has
long been a subject of scholarly attention, but it is only recently that constitutional theory has
paid attention to the ways in which cooperative regimes serve as sources of innovation and
regulatory competition. We have thought about the role states play in checking the national
government since Madison, but it is only recently that we have paid attention to the
uncooperative dimensions of cooperative federalism. We have spent decades identifying the best
institutional strategies for checking a powerful executive, but it is only in 2011 that a scholar
directed our attention to the role states can play in doing so. We have long written about the ways

41
Id.
42
Id.
43
Adam B. Cox, Expressivism in Federalism: A New Defense of the Anti-Commandeering Rule?, 33 LOY. L.A. L.
REv. 1309, 1312 (2000).
44
See Abbe R. Gluck, Intrastatutory Federalism and Statutory Interpretation: State Implementation of Federal Law
in Health Reform and Beyond, 121 YALE L.J. 534 (2011) (canvassing the many forms of federalism that can be
found in the Patient Protection and Affordable Care Act).
45
Id. At 586
that federal administrative agencies interpret federal law, but the ways in which states' agents do
so had been neglected until recently.

III. Stint of Cooperative federalism in India

The founding fathers built the fabric of Indian Federalism on -three pillars, viz., a strong
Centre, flexibility, and co-operative federalism. These concepts are not in any way novel as in
varying degrees they have come to be accepted, and translated into practice, in the federations of
the U.S.A., Canada and Australia.. The framers of the Indian Constitution learned a good deal
from the experiences - the problems faced and solutions found - of these federations, and their
approach to the structuring of Indian Federalism was conditioned in good measure by that
knowledge. It might therefore be worthwhile to have a brief survey of the trends in these
federations as a background to the Indian Federalism.46
The present stage in India can be described as ‘Organic-Federalism, where the
federations the units function as a part of one organism to achieve the common-
governmental purposes. The lessons to be learnt form the recent-developments & the
pressure of Circumstances that developed together with the large-scale interdependence
of the states in many matters, had really indicated a case for organic-federalism. There are
strong organic-Filaments-constitutional, financial & administrative, which may be relied
upon to uphold the unit of India.47 For example: Several industrial establishments are
financed & managed by the Union Government, but are operating within the territories of
the unit-states; & various nation wide agricultural-operations in the matters of improving
technology, seeds etc.48

46
M.P.Jain, Some Aspects of Indian Federalism, available at -
http://www.zaoerv.de/28_1968/28_1968_2_a_301_364.pdf
47
Praveen Gupta, Federalism: New Dimensions in Indian Context, Available at-
http://www.lawyersclubindia.com/articles/Federalism-New-Dimensions-in-Indian-Context-
3480.asp#.UKPXONngGzU
48
Also, The Damodar Valley Corporation, a joint enterprise of the Centre and the two States of Bihar and West
Bengal, has been established under a Central law) to develop the interstate valley of the Damodar River for
irrigation, power and flood control. The corporation consists of three members appointed by the Central Government
in consultation with the State Governments. In discharge of its functions, the corporation is to be guided by
instructions on questions of policy issued by the Centre. The corporation’s annual reports are laid before Parliament
and the two State Legislatures. A basis for apportioning costs of the programme executed by the corporation among
various governments has been laid down in the Act. In case of a dispute, the matter is to be referred to an arbitrator
appointed by. the Chief justice of India and the arbitrator’s decision is to be final.
 The Indian Constitution provides for a number of mechanisms to promote co-operative
federalism. Article 263 empowers the President to establish Inter-State Council to promote better
co-ordination between the Centre and States.49

Inter -State Council was formally constituted in 1990. It is headed by the Prime Minister and
includes six Cabinet ministers of the Union and Chief Ministers of all the states and union
territories. Zonal Councils were also set up under the State Re-organization Act, 1956, to ensure
greater cooperation amongst states in the field of planning and other matters of national
importance. The act divided the country into six zones and provided a Zonal Council in each
zone. Each council consists of the Chief Minister and two other ministers of each of the states in
the zone and the administrator in the case of the union territory. The Union Home Minister has
been nominated to be the common chairman of all the zonal councils.

Though, regional forces have their own role to play. It is here that the whole new upsurge
from local and regional thresholds of the polity seems to provide the basis for a new and quite
different alignment of forces than the various 'national' alternatives that are being tried. Provided,
however, the following is clearly understood :

1. The so-called 'regional' upsurge is in fact a response to a national crisis, emanating both
from the failures of the existing system and the mass discontent against it, and providing the
prospects of an alternative power formation and an alternative package of policies, both of which
are aimed at decentralisation of the national polity in which the people — and especially the poor
and oppressed among them — are given their rightful place in the scheme of things.50
2. It involves far more than mere capture of state power, replacing one set of politicians by
another, while in all other respects allowing the same old structures — bureaucrats, contractors,
party mafias — to administer the same old policies that continue to invest in abstract enterprises,
drain people of their natural resources (through World Bank schemes and what not), go for a

49
http://www.enableall.org/competitive-quest/GK/IndianFederalismCenterStateRelations.html
50
Rajni Kothari, Rethinking Centre-State Relations A Struggle for Power, EPW
blind competition for a rapacious technology and, through all this, marginalise larger and larger
sections of the people. It should instead be seen to involve a reversal of all this.51
3. It is not misconstrued as a basis for hurriedly putting together yet another motley conclave
of disparate and opportunistic groups, thus falling into yet another centralising trap, forgetting
that a truly national alternative will have to be built from the grass roots and regional movements
up — to begin with horizontally and only after conditions are ripe, vertically.52
4. And finally, it is clearly and unambiguously seen as nothing short of a power struggle both
against the Centre und against all other centralising tendencies in the economy and the polity,
opening up new and creative spaces for local initiatives and experiments. This involves work in
two dimensions — consolidating new party formations on the one hand, and supporting and
eluting sustenance to a variety of nonparty political fonnations that are working among the poor
and the destitute (where parties hardly reach)' on the other. It is only through a steady and studied
federating of the varied forces of transformation that it will become; possible to contend with the
power, the threats and the intimidations of central power.53

STUDY OF LOKPAL BILL: CASE OF MISSED COOPERATION

[C.1.] FEDERALISM IS PART OF A BASIC STRUCTURE OF THE CONSTITUTION AND CANNOT BE

VIOLATED.

The most important feature of a federal constitution is the distribution of legislative powers
between the Centre and the States.54 Under the Constitutional scheme, this distribution of
legislative powers is contained in Part XI under Article 246 read with Seventh Schedule of the
Constitution of India. It provides for a well-defined distribution where exclusive power to
legislate with respect to the matters enumerated in the State List is assigned to the legislatures of
the States established by Part VI of the Constitution. Having regard to the Constitutional
provisions55 it is not possible to say that India is not a subscriber to federalism. 56 Democracy and
federalism are the essential features of our constitution and are part of its basic structure. 57. In the

51
Id.
52
Id.
53
Rajni Kothari, The Non-Party Political Process,
54
H.M. SEERVAI, CONSTITUTIONAL LAW OF INDIA, 287 (Universal Law Publishing Co.,Vol. I, 4th ed., 2008) (1967).
55
Articles 243, 248, 250, 256, 257, 356 and Entry 97 in List I of the VII Schedule of the Constitution of India, 1950.
56
A.P. Transcor v. Sri Gowri Sankar Cable Industries and ors.,2002(3) ALT 134.
57
S.R. Bommai V. Union of India, AIR 1994 SC 1918.
leading case of Keshvananda Bharti v. State of Kerala58, Chief Justice Sikri (as he was then)
declared that the Parliament’s constituent power is subject to inherent limitation, the Parliament
could not use its amending powers under Article 368 to damage, emasculate, destroy , abrogate,
change or alter the basic structure or framework of the Constitution. Recently in I.R. Coelho v.
State of TN59, a nine judge bench of the SC reiterated the ‘basic structure’ doctrine and held that
the doctrine has now become an axiom. Thus, it is a well-established law that federalism is a
basic structure of the Constitution and cannot be violated by the Parliament.

[C.2] THE PARLIAMENT HAS NO LEGISLATIVE COMPETENCE TO ENACT THE LOKPAL AND

LOKAYUKTAS’ ACT 2011.

As per the Constitution of India60, it provides for the distribution of the legislative power
between the Union and the States and clearly states the respective legislative fields 61 under which
a particular legislature has exclusive power to legislate. Within the sphere allotted to them, States
are supreme. The Centre cannot tamper with their powers 62.The state has been given the power to
legislate with respect to State Public Services; State Public Service Commission under Entry 41
of the List II63. As State Officials are brought within the purview of the Act, the subject matter of
the statute falls within the State List. This entry gives the power to the State legislature to abolish
and create offices, enhance or reduce emoluments, increase or diminish tenure and prescribe
conditions of service for public services.64 Also Clause 9365 in the Act touches the area of State
services, wherein it provides that the Lokayukta may recommend to the state government the
transfer or suspension of a public servant for a specific period. Also the State under Entry 1 of
the same List66 i.e. Public Order has the jurisdiction to enact on the subjects involving public
order. The word ‘public order’ is of wide connotation and signifies the state of tranquility
prevailing among the members of political society as a result of the internal regulation of the
government.67 It includes the safety of the public in general, for eg. Laws to prevent forcible

58
AIR 1973 SC 1461.
59
AIR 2007 SC 861.
60
Article 246 of the Constitution of India, 1950.(here in after referred to as The Constitution).
61
Schedule VII of the Constitution
62
Supra note 17
63
Id.
64
A.J. Patel v. State of Gujrat, AIR 1965 Guj. 23
65
Section 93 of The Lokpal and Lokayuktas Act, 2011 (here in after referred to as The Act)
66
Supra note 17
67
ARVIND P DATAR, COMMENTARY ON THE CONSTITUTION OF INDIA, 2184 (Wadhwa Nagpur, Vol. 2, 2nd Ed., 2007)
religious conversion that lead to breach of public order would fall within this entry. 68 A law on
public order must truly and essentially address itself to the preservation and maintenance of
public order.69 The basic idea of the Act as understood after a careful perusal is to maintain public
order by safeguarding the public from the ills of corruption within the members of political
society and government offices in the State, thus, it is crystal clear that the chapters relating to
the Lokayukta encroach on the power of the State under the Constitution and hence are outside
their competence.

[C.3] THE PRESENT LEGISLATION ATTRACTS THE DOCTRINE OF COLOURABLE LEGISLATION

AND DOCTRINE OF ULTRA VIRES

The Doctrine of Colourable Legislation states that “if a legislature has no competence to pass a
law on a subject, it cannot pass a law on that subject by merely purporting to act within the limits
of its powers. Such legislation is considered as a colourable 70 legislation and a fraud on the
Constitution”, with the result that such a law is invalid. It is a question of competence of
legislature71 and in this case the legislature has no competence to enact the law. The legislature
has transgressed the limits imposed by the Constitution, although indirectly 72. The legislature
has no power to legislate on any item under the State List of Schedule VII or on account of
limitation imposed under Part III of the constitution dealing with the fundamental rights and still
the legislature has enacted a statute in assumption of such power which actually falls under
entries 41 and 1 of the State List 73. In the present case thus, the Act is colourable and hence
should be declared void.

The fundamental concept of the Doctrine of ultra vires with reference to the legislative act is that
the act is enacted in excess of the powers possessed by the particular legislature.74

IN FAVOUR
68
Rev.Stainislaus v. State of Madhya Pradesh, AIR 1977 SC 908.
69
Vijay C. Puljal v. State of Maharashtra (2005)107 BOMLR 983
70
State of Bihar v. Kameshwar Singh,AIR 1952 SC 252.
71
Gullapalli Nageswara Rao v. A.P. SRTC, AIR 1959 SC 308.
72
Refer to Entry 13, 14 of List I of Schedule VII of the Constitution of India
73
Dr. CD JHA, JUDICIAL REVIEW OF LEGISLATIVE ACTS, 344 (LexisNexis Butterworths Wadhwa Nagpur, 2nd ed.,
2009)
74
P Jarnardhana v. Union of India ,AIR 1970 Mys 171, para 22.
Scholars hesitate to consider the Indian Constitution as ‘truly’ federal and they use such epithets
for it as ‘quasi-federal’ or ‘unitary with federal features’75. It has been characterized as “more
Unitary than Federal76”.India is a Union of States77 where Parliament can by law form a new
state78, alter the name or size of an existing state 79 and even curtail the power, both executive and
legislative, by amending the constitution. Also the emergency provisions have at times been held
as constituting a major deviation from pure Federalism. 80That is why the constitution of India is
differently described, more appropriately as ‘quasi- federal’ because it is a mixture of the federal
and unitary elements, leaning more towards the latter. 81 Our constitution has, despite whatever
federalism may be found in its structure, so strongly unitary features also in it that, when the
totality of these provisions is examined, it becomes difficult to assert confidently how much
federalism such a constitution contains, whether those parts of it which seem to override the
federal elements of our constitution are not more basic or significant than what is described as its
federalism.82 Thus, from the above arguments, it can fairly well be ascertained that India does not
has a Federal Constitution in a strict sense.

[C.2]PARLIAMENT HAS LEGISLATIVE COMPETENCE TO ENACT THE LAW.

[C.2.A] Entry 13 & 14 Of List I.

The legislative field between Parliament and the State Legislature is divided by Article 246. 83
The power to legislate in respect of Treaties lies with Parliament under Entries 13 and 14 of List-
184. The present Act has been enacted to implement the United Nations Conference Against

75
P.K. Tripathi, Federalism, The Reality and The Myth, (1974) Bar Council of India , 251.
76
State of Rajasthan v. Union of India, AIR 1977 SC 1361.
77
Article 1 of The Constitution of India (herein after referred as “the Constitution”).
78
Article 2 of the Constitution.
79
Article 3 of the Constitution.
80
Article 352, 356 of the Constitution, see also : M.P JAIN, INDIAN CONSTITUTIONAL LAW, 795 ( LexisNexis
Butterworths Wadhwa Nagpur, 6th ed., 2011).
81
JAGDISH SWARUP, CONSTITUTION OF INDIA, 2552 (Modern Law Publications, vol. 3,2nd edn.).
82
Karnataka State v. Union of india AIR 1978 SC 68.
83
State of West Bengal v. Kesoram Industries, (2004) 10 SCC 201.
84
Union List, VII Schedule of the Constitution.
Corruption85 and thus would come under these Entries. The entries confers power to enact
necessary legislation to effectuate international treaties.86

[C.2.B] Article 253& 51(C) Of The Constitution Of India.

The power of Parliament under Entries 13 & 14 is further re- enforced by Art. 253, wherein a law
passed by the Parliament to give effect to an International Convention shall not be invalidated on
the ground that it contained provisions relating to the State subjects. The distribution of
legislative powers between the Union and States shall not restrict the power of Parliament to
make laws under Article 253.87Also by virtue of this Article, if a treaty or convention deals with a
subject within the competence of the State Legislature, notwithstanding Article 246(3), the
parliament alone has the power to implement the same.

The Act is in conformity with Article 51 of the constitution of India, which states in the sub
clause (c) that the state shall foster respect for international law and Treaty Obligations. A
conjoint reading of articles 253, 51 (c) and Entries 10 and 14 of List 1 clearly confers upon the
parliament the legislative competence to enact with respect of fulfilling an International Treaty
Convention and thus the present Act is within the Legislative competence of the Parliament.
Also, according to Art. 258(2), a central law, whether pertaining to a matter in List I or List III,
may confer powers and impose duties on the States, their officers and authorities 88, thus the
argument

[C.2.C] Entries 1 & 2 Of List III.

Arguendo, The Lokpal act deals with Criminal Penal action against public servants including
application of the IPC and Cr.P.C, both of which are covered under List III, Entries 1 and 2. The
Lokpal bill also touches upon the issue of administration of justice specifically covered under
entry 11 A of List III. The opening words of Article 246(2) “Notwithstanding anything in clause

85
Un General Assembly, United Nations Conventions Against Corruption, 31 October 2003, A/58/422, available
at: http://www.unhcr.org/refworld/docid/4374b9524.html[last, ratified by India on 12th May, 2011, last seen on
17 February 2012 at 1:00 PM].
86
Union of India v. Azadi Bachao Andolan, AIR 2004 SC 1107.
87
JAGDISH SWARUP, CONSTITUTION OF INDIA, 2710 (Modern Law Publications, vol. 3,2nd ed.).
88
M.P JAIN, INDIAN CONSTITUTIONAL LAW, 723 ( LexisNexis Butterworths Wadhwa Nagpur, 6th ed., 2011).
(3)…” make it clear that the Union power shall prevail in a case of conflict between List II and
List III89, thus considering this aspect too, Parliament possess the competence to enact the law.

[C.3]DOCTRINE OF PITH AND SUBSTANCE.

If in pith and substance, the legislation falls within one entry or the other but some portion
incidentally trenches upon and might enter a field under another list, then it must be held to be
valid in it’s entirety, even though it might incidentally trench on matters which are beyond its
competence.90 It is not possible to make a clear cut distinction between the subjects of Union and
the State Legislatures91, overlapping is bound to be there92. Applying this Doctrine, it is accepted
that the Law might trench upon matters of State Public Services 93 but the true character and
nature of the legislation comes within the Union List hence the Act should be held valid in its
entirety.

Cooperative Federalism: Do we sense a synthesis?

89
Prafulla Kumar v. Bank of Commerce, AIR 1947 PC 60, see also Indu Bhushan Bose v. Rama Sundari Debi, AIR
1970 SC 228; Union of India v. H.S. Dhillon, (1971) 2 SCC 779.
90
Delhi Cloth & General Mills Co. Ltd. V. Union of India, AIR 1983 SC 937.
91
Subramanyam Chettiar v. Muthuswami Goudan, AIR 1941 FC 47.
92
Prafulla Kumar v. Bank of Commerce, AIR 1947 PC 60.
93
Entry 41 of List III, VII Schedule of the Constitution.
US

In the American federal system, there are limitations on national government's ability to carry out
its policies through the executive branch of state governments. For example, in Printz v. United
States94, the Court held that the national government could not directly require state law
enforcement officers to conduct background checks under the Brady firearms legislation. The
court explained that prior decisions warned that "this Court never has sanctioned explicitly a
federal command to the States to promulgate and enforce laws and regulations." And yet, there
are significant advantages in a federal system to obtain state assistance in the local
implementation of federal programs. Implementing such programs through national employees
would significantly increase the size and intrusiveness of the national government. Moreover,
local implementation may assure that these programs are implemented in ways that take local
conditions into account.

For this reason, Congress has often avoided adoption of completely nationalized programs by
one of two devices. In the first, Congress creates a delivery system for federal programs in which
the national government encourages local implementation of a federal program by providing
significant matching funds. In this context, the phrase may be found in a number of Supreme
Court and lower court federal cases. The most frequent early use of the phrase may be found in a
series of cases describing the paradigm for federally sponsored welfare programs such as
medical assistance or the former Aid to Families with Dependent Children (AFDC) programs in
which a participating state's program is financed largely by the Federal Government, on a
matching fund basis, subject to federal mandatory regulations. See for example, King v. Smith95
and a series of subsequent AFDC cases. More recently, the phrase has been used in connection
with other federal programs built on the cooperative federalism model. See California v. U.S.96
(Reclamation Act) and Schaffer v. Weist97 (Special education). Here, the motivation for State
compliance is that absent state compliance with federal conditions, the state loses significant
federal funding.

94
521 U.S. 898 (1997)
95

96
438 U.S. 645 (1978)
97
The second method of encouraging states to implement federal programs is described in New
York v. United States.98 In this form, the Congress states that it will take over the regulation of an
activity at the national level, unless the State itself implements its own program of regulation
meeting minimum federal standards.99 Here, the motivation for State compliance is that absent
state regulation, the state loses power over the regulated area entirely. In New York v. United
States100, the court explained:

"....where Congress has the authority to regulate private activity under the Commerce Clause, we
have recognized Congress' power to offer States the choice of regulating that activity according
to federal standards or having state law preempted by federal regulation. Hodel v. Virginia
Surface Mining & Reclamation Association.101 This arrangement, which has been termed “a
program of cooperative federalism,” Hodel, supra, is replicated in numerous federal statutory
schemes. These include the Clean Water Act102, (Clean Water Act “anticipates a partnership
between the States and the Federal Government, animated by a shared objective”); the
Occupational Safety and Health Act of 1970,103 the Resource Conservation and Recovery Act of
1976,104 and the Alaska National Interest Lands Conservation Act.105

While the federal system places limits on the ability of the national government to require
implementation by a State executive branch, or its local political subdivisions, that limitation
does not apply in the same way to State judicial systems. In part, this is because the founders
understood that state courts would be courts of general jurisdiction, bound to apply both state and
federal law. In part, it is because the State courts adjudicate cases between citizens who are
bound to comply with both state and federal law. When the Congress seeks to establish federal
legislation which governs the behavior of citizens, the Congress is free to choose among three
judicial enforcement paradigms. It may open both federal and state courts to enforcement of that
right, by specifically providing concurrent jurisdiction in the federal courts. It may grant

98
505 U.S. 144 (1992)
99
Hills, Roderick M. (1998). "The Political Economy of Cooperative Federalism: Why State Autonomy Makes
Sense and "Dual Sovereignty" Doesn'tAuthor". Michigan Law Review 96 (4): 813–944.
100

101
See also FERC v. Mississippi
102
Arkansas v. Oklahoma
103
Gade v. National Solid Wastes Management Assn.
104
Department of Energy v. Ohio
105
Kenaitze Indian Tribe v. Alaska
exclusive jurisdiction to the federal courts, or it may choose to leave enforcement of that right to
civil dispute resolution amongst parties in State court.

Case 1.

Under the law, states and insurers have to be ready to sign up 32 million new enrollees either for
Medicaid or private insurance plans by 2014 using online insurance marketplaces known as
exchanges, designed to help individuals and small businesses shop around for acceptable
policies. All states are supposed to provide standardized, customer-friendly application processes
to help consumers, including low-income individuals applying for the expanded Medicaid
program.106

If the mandate passes constitutional muster, some states will be in good shape to meet the
requirement, some definitely will not be and the others will be somewhere in the middle. The
pattern of states by category predictably falls into the classic red-blue-purple divide in modern
American politics. Here’s the scorecard: The lawsuit challenging the ACA included 26 states.
The Urban Institute counts 14 states that have made significant progress in forming their
exchanges, 16 that have done very little and the remaining 20 somewhere in between.107

The Supreme Court’s Decision

The court’s June 28, 2012 ruling on the constitutionality of the Affordable Care Act (ACA)
addressed four key questions:

Is the individual mandate to purchase healthcare insurance constitutional?

Yes — but not under Congress’s commerce clause powers. Congress cannot compel individuals
to enter the stream of commerce that Congress wishes to regulate.

Instead, a majority of the court held that the penalty (or “shared responsibility payment”)
assessed on individuals who decide not to purchase insurance is a legitimate exercise of
Congress’s constitutional taxing powers.
106
http://www.governing.com/columns/potomac-chronicle/col-affordable-care-act-case-study-for-cooperative-
federalism.html
107
Id.
Given that the penalty is a tax, should the Anti-Injunction Act prevent challenges to the
Affordable Care Act until the tax has been collected?

No. The Anti-Injunction Act, passed in 1867, says that a taxpayer who protests a tax must first
pay the tax before challenging it in court. The act does not apply in this case, however, because
Congress intentionally used the word “penalty” instead of “tax” to describe the ACA’s shared
responsibility payment. This signaled Congress’s intent that the Anti-Injunction Act should not
apply in this case.

Is the Affordable Care Act’s expansion of Medicaid constitutional?

No. The federal government can use incentives to encourage states to take actions that otherwise
would not be within the range of federal power. But the threat to withhold all of a state’s
Medicaid money for failure to expand Medicaid eligibility was “a gun to the head of the states”
that tipped the Medicaid expansion from a federal effort to influence state action into a federal
effort to coerce the states to take action.

Are provisions found unconstitutional severable?

Yes. Medicaid expansion was the only provision found unconstitutional. The court’s decision on
Medicaid expansion modified the Social Security Act, which contains a severability clause.
Severability clauses are common features in federal laws. They say that if any provision of a law
is found unconstitutional, it can be “severed” from the law, with other provisions remaining in
force. Because the ACA did not have a severability clause, the court heard arguments on whether
provisions that were being challenged could be severed, or if they were so central to the ACA
that it could not stand without them.

Source- http://www.hfma.org/Templates/Print.aspx?id=24263

Australia
TEXTUAL MARKERS OF CO-OPERATIVE FEDERALISM
The constitution effected an agreed transfer of powers from colonial governments to the new
Commonwealth covering a range of subject matter areas set out, for the most part in section 51 –
(see Annexure 1 at the end of the second part of this article). It also has plenary legislative
power with respect to Australian Territories, such as the Northern Territory and the Australian
Capital Territory. Within the areas of Commonwealth power specified in section 51 there are
indicators of opportunities for cooperative federalism in the exercise of legislative powers.
So the Commonwealth Parliament may make laws for the peace, order and good government of
the Commonwealth with respect to:
(xxiv) The service and execution throughout the Commonwealth of the civil and criminal process
and the judgments of the courts of the States.
(xxv) The recognition throughout the Commonwealth of the laws, the public Acts and records,
and the judicial proceedings of the States.
(xxxiii) The acquisition with the consent of the State, of any railways of the State on terms
arranged between the Commonwealth and the State.
(xxxiv) Railway construction and extension in any State with the consent of that State.
(xxxvii) Matters referred to the Parliament of the Commonwealth, by the Parliament or
Parliaments of any State or States, but so that the law shall extend only to States by whose
parliaments the matter is referred or which afterwards adopt the law.
(xxxviii) The exercise within the Commonwealth, at the request or with the concurrence of the
Parliaments of all the States directly concerned, of any power which can at the establishment of
this Constitution be exercised only by the Parliament of the United Kingdom or by the Federal
Council of Australasia.

Chapter III of the constitution, dealing with the judicature, contains provisions under which the
courts of the various States are to be repositories for the exercise of such federal jurisdiction as is
conferred upon them by the Commonwealth Parliament. This is in addition to the power that the
Commonwealth Parliament has to create its own courts and define their jurisdiction. Section 77
of the constitution authorises the Parliament to make laws defining the jurisdiction of federal
courts and laws:

77(iii) Investing any court of the State with federal jurisdiction.

So too community law can be administered in national courts as well as in the Courts of the
Community.
Section 80 of the constitution, which requires that the trial on indictment of any offence against
any law of the Commonwealth be by jury, also requires that “... every such trial shall be held in
the State where the offence was committed, and if the offence was not committed within any
State, the trial shall be held at such place or places as the Parliament prescribes.” It is also linked
to the Commonwealth’s ability to use State courts for the exercise of federal jurisdiction arising
under the criminal law of the Commonwealth. It also is linked to the Commonwealth’s
ability to use State prisons.In section 51 there are indicators of opportunities for cooperative
federalism in the exercise of legislative powers.

So the Commonwealth Parliament may make laws for the peace, order and good government of
the Commonwealth with respect to:
(xxiv) The service and execution throughout the Commonwealth of the civil and criminal process
and the judgments of the courts of the States.
(xxv) The recognition throughout the Commonwealth of the laws, the public Acts and records,
and the judicial proceedings of the States.
(xxxiii) The acquisition with the consent of the State, of any railways of the State on terms
arranged between the Commonwealth and the State.
(xxxiv) Railway construction and extension in any State with the consent of that State.
(xxxvii) Matters referred to the Parliament of the Commonwealth, by the Parliament or
Parliaments of any State or States, but so that the law shall extend only to States by whose
parliaments the matter is referred or which afterwards adopt the law.
(xxxviii) The exercise within the Commonwealth, at the request or with the concurrence of the
Parliaments of all the States directly concerned, of any power which can at the establishment of
this Constitution be exercised only by the Parliament of the United Kingdom or by the Federal
Council of Australasia.

In Chapter IV there are provisions mandating distribution of Commonwealth revenue to the

States – see ss 87, 89, 93 and 94. Section 96, which provides for conditional financial grants
from the Commonwealth to the States, supports the uniform income tax scheme. The
Commonwealth Parliament passed an Act to grant general revenue to the States on the condition
that they did not impose their own income tax. Grants made under section 96 have, by way of the
conditions attaching to them, allowed the Commonwealth to exercise powers with
respect to education, health, housing, the environment and other areas not covered by its
legislative responsibilities. It is in form, if not in substance, a provision which requires
cooperation in the limited sense that no State is obliged to accept a financial grant under s 96 on
conditions which it does not regard as acceptable. Section 105 of the constitution allows for the
Parliament of the Commonwealth to take over from the States their public debts. Although
initially limited to debts existing at the time of federation, that limitation was removed in 1910
by referendum. In 1928 section 105A was added to the constitution by referendum. It authorises
the Commonwealth to make agreements with the States with respect to their public debts.

The constitutions of the States reflecting, in the case of Western Australia, its pre-federation
colonial constitution, are continued by section 106 of the Commonwealth Constitution. The
powers of the State Parliaments are saved by section 107, as are the laws of the various States
by section 108.

States may surrender territory to the Commonwealth under section 111, again an essentially co-
operative exercise. It was by such a surrender that the Australian Capital Territory was created
and similarly the Northern Territory of Australia. Section 118 provides for full faith and credit to
be given throughout the Commonwealth to the laws, public Acts and records and judicial
proceedings of every State. Every State is required by section 120 of the constitution to make
provision for the detention in its prisons of persons accused or convicted of offences against
the laws of the Commonwealth and for the punishment of the persons convicted of such
offences. Other exercises of power which require the consent of the States, include the alteration
of their limits and the creation of new States (ss123 and 124).

As may be seen from this review the constitution provides for what can properly be described as
cooperative federalism under which, by making suitable arrangements, Commonwealth and
States, acting together, can “... achieve objects that neither alone could achieve” (Deputy Federal
Commissioner of Taxation (NSW) v WR Moran Pty Ltd.108 Such cooperation may relate to the
exercise of legislative, executive or judicial power. Importantly, and in addition to the specific
co-operative arrangements for which the constitution provides, there is a record of
intergovernmental agreements between the Commonwealth, the States and the self-governing
territories to deal with national problems which need to be attacked by legislation from each of
them. Such agreements form the political foundation for schemes of complementary and
interlocking legislation by all the polities concerned.

Role of Indian, US and Australian Judiciary

The investing of federal jurisdiction in State courts is expressly authorised by the constitution.
But the High Court held in Re Wakim; Ex parte McNally (1999) 198 CLR 511 that this long-
standing co-operative mechanism is asymmetrical as the constitution does not authorise the
investing in federal courts of jurisdiction arising under laws of the States. That is, of course,
subject to the proposition that federal jurisdiction may incorporate, as an element of a matter
before the Court, claims arising under the laws of the States and under the common law (Fencott
v Muller (1983) 152 CLR 570 at 608; Stack v Coast Securities (No 9) Pty Ltd (1984) 154 CLR
261 at 294–295; PCS Operations Pty Ltd v Maritime Union of Australia (1998) 153 ALR 520 at
524–25).

In Re Wakim McHugh J observed (at 556):

…co-operative federalism is not a constitutional term. It is a political slogan, not a criterion of
constitutional validity or power.

This, with respect, seemed an unduly dismissive statement. The constitution is the product of an
historic exercise in co-operative endeavour by the pre-federation colonies that became the States.
It provides a framework which requires a degree of co-operation if it is not to be unworkable. In
any event, as will be seen below, the difficulties generated by the Wakim decision were overcome
by resort to referral of relevant powers from the States to the Commonwealth.
108
(1939) 61 CLR 735 at 774
The difficulties which led to the invalidation of the cross-vesting of jurisdiction under the co-
operative corporations law scheme were compounded by a restrictive approach adopted in the
High Court, to the construction of laws made under the scheme in so far as they conferred
functions under State law upon the Commonwealth Director of Public Prosecutions and the
Australian Securities and Investments Commission (see Byrnes v R (1999) 199 CLR 1; Bond v R
(2000) 201 CLR 213; R v Hughes (2000) 202 CLR 535 and Macleod v The Australian Securities
and Investments Commission (2002) 191 ALR 543 and see De Costa, The Corporations Law and
Co-operative Federalism after the Queen v Hughes (2000) 22 Syd Law Rev 245 and McConvill
and Smith, Interpretation and Co-operative Federalism; Bond v R from a Constitutional
Perspective (2000) 29 Fed Law Rev 75).

These difficulties however raised questions of statutory rather than constitutional interpretation
and so have a less intractable quality about them. Other examples of this kind of co-operative
federalism include the adoption by the States of gene technology legislation passed by the
Commonwealth and laws relating to research involving human embryos.

Indian Judiciary

In State of Rajasthan v Union of India , States of Rajasthan, Madhya Pradesh, Punjab, Bihar,
Himachal Pradesh and Orissa challenged the sufficiency of grounds of action by the governor
under Article 356(1). Chief Justice Beg held that sufficiency or inadequacy of the grounds for
declaration of emergency could not be gone into by the Court. Only if the grounds are disclosed
to the public by the Union Government which revealed that a constitutionally or legally
prohibited or extraneous or collateral purpose was sought to be achieved, only then the Court
would look into it. Dissent was been expressed against this judgement in S.R. Bommai case
which expanded the scope of judicial review.

In State of Rajasthan v UOI, 1977 , it was quoted that according to Granville Austin, the
Constitution of India was perhaps the first constituent body to embrace from the start what A.H.
Birch and others have called “cooperative federalism”. Chief Justice Beg called the Constitution
‘amphibian’,”....If then our Constitution creates a Central Government which is ‘amphibian’, in
the sense that it can move either on the federal or on the unitary plane, according to the needs of
the situation and circumstances of a case...”. In the words of Chief Justice Beg in State of
Rajasthan v Union of India, “.....A conspectus of the provisions of our Constitution will indicate
that, whatever appearance of a federal structure our Constitution may have, its operations are
certainly, judged both by the contents of power which a number of provisions carry with them
and the use that has been made of them”.

In S.R. Bommai v Union of India , the phrase “pragmatic federalism” was used. In the words of
Justice Ahmadi, “....It would thus seem that the Indian Constitution has, in it, not only features of
a pragmatic federalism which, while distributing legislative powers and indicating the spheres of
governmental powers of State and Central Governments, is overlaid by strong unitary features...”

Quoting Justice P.B. Sawant in S.R. Bommai v Union of India , “....The courts should not lightly
decline to exercise judicial review when as a matter of common knowledge, the emergency has
ceased to exist.....This amendment has been prompted not only by the abuse of the Proclamation
of emergency arising out of war or external aggression, but even more, by the wholly unjustified
Proclamation of emergency issued in 1975 to protect the personal position of the Prime Minister”

In D.C. Wadhwa v State of Bihar , the Court upheld the writ petitions challenging the
constitutional validity of the practise of the Governor of Bihar of repeatedly promulgating the
same ordinances without caring to get the Ordinances replaced by Acts of the legislature. To
quote Justice Bhagwati, “The power to promulgate an ordinance is essentially power to be used
to meet an extraordinary situation and it cannot be allowed to be ‘perverted to serve political
ends’ ”

Pros and Cons

III. Cooperative federalism

A. Structure. Cooperative federalism has no clear division between state and federal
responsibilities, or, in perhaps the more usual occurrence, the federal government has essentially
a plenary scope of power, but states are circumscribed in entering realms reserved for the federal
government, like foreign policy. In either case there are large overlapping areas of
responsibilities where both state and federal governments can act separately as well as jointly.
These joint enterprises are generally called cooperative federalism and constitute much of
modern government in the United States.

B. Advantages

1) Flexibility. Under the cooperative federalism model, because the federal government has
plenary responsibility, there is no need for a permanent division of power. Thus, the federal
government can take responsibility for area that is optimal at any particular time and, in theory,
create and optimal division for states and federal responsibilities. For instance, today the federal
government in the United States is able to create any effective division it wants, because it is
now able to regulate almost area. Moreover, because of the Supremacy Clause of our
Constitution it can sweep away any state regulation inconsistent with federal law. The federal
government is not required to regulate, of course, and its failure to act itself provides regulatory
space to the states.

2) Separation of the Funding and Provision of Services. As described below, one other advantage
of cooperative federalism is the ability to separate the government that funds the services from
the government that provides the services. In this division, the federal government provides the
funds and the states provide the services. 109 In a federal republic, states may vary considerably in
their wealth and federal programs can be designed to equalize resources in a particular area,
effectively redistributing money from one state to another for some public purpose. Nevertheless,
it may still be more efficient for the federal government in effect to buy the services from the
state rather than to provide the services itself. The states can then compete on their provision of
services and tailor them to their citizens’ needs.

3) Potentially Cooperative. Federal and state governments can work together in areas of shared
responsibilities, perhaps making use of one another’s personnel.

109
See Roderick M. Hills, Jr., The Political Economy of Cooperative Federalism: Why State Autonomy
Makes Sense and "Dual Sovereignty" Doesn't, 96 MICH. L. REV. 813, 893-900 (1998).
C. Disadvantages
1) Lessening of competition among states. Because the federal government establishes the
ground rules it can establish relatively uniform rules, thus diminishing competition among states
to make the most effective rules. Interest groups often do not want competition and thus will
lobby for uniform rules that will choke it off. As a result, the federal government may often
permit less diversity among states than would be the case under constitutional federalism. In the
United States on occasion, even the states themselves have manipulated the federal government
into more uniform rules to avoid competition among themselves. This isin effect a state cartel –
the opposite of the competition generated by constitutional federalism.

2) Lack of accountability. Citizens are unclear which government is responsible for which
function and thus have a harder time holding governments accountable, weakening incentives to
provide cost-effective services. In contrast to constitutional federalism, an economist would say
that cooperative federalism raises the agency costs of government.

3) Federal Dominance. Although the programs are styled as cooperative—the federal

government can dictate terms

4) Loss of experimentation. Because federal government is ultimately in charge there is less

experimentation and thus fewer differences in programs for social scientists and citizens to
evaluate.

5) Excessive Spending. As I will discuss below, competitive federalism, at least in the United
States, often leads to excessive spending. If money is raised at the federal level, but states have
some authority to determine how much money is spent, there will be pressure for overspending,
because states pay only a small fraction of the additional cost they incur. It is a tragedy of the
commons where states gain incentives to overfish the federal budget.

Other Nations

VII. Other Nations

I am not a comparativist myself and thus I have largely relied on the American experience to
provide ideas of how cooperative federalism can be improved. What I know of two other
countries—Germany and Canada—speak more to the dangers of excessive cooperative
federalism rather than provide helpful examples of how it can work better.110

In Germany the Constitution mandates cooperative federalism in two important ways. First, it
mandates a sharing out of revenues among the Lander—the German equivalent of states. Second,
it expressly authorizes and encourages state enforcement of federal laws, thus giving more power
to state official and bureaucrats. The legislative structure also reinforces cooperative federalism
—the upper house is made up of representatives of Lander. It is as if an American state official
sat in the Senate.

At least according to Michael Greve, the keenest observer of German constitutionalism in the
United States, the results have been very unhappy.111 Because lines of authority between the state
and federal governments are so blurred, citizens have trouble holding anyone accountable.
Because taxes are not collected by the government providing the services, taxes have tended to
rise inexorably. An ever larger tax take also keeps the peace between the federal and state
governments while impoverishing their citizens. The current German coalition government
agrees. It has introduced and passed some reforms that attempt to disentangle some state and
federal authorities and make clear the division between state and federal responsibilities. Thus, I
am afraid that the lessons of Germany for cooperative federalism are largely negative. Above all,
the German experience warns that it is important to create structures that militate against
cooperative federalism’s natural tendency to create more spending and confusion in lines of
accountability. It certainly suggests that it may be perilous for Australia to undertake more
ambitious programs of cooperative federalism before it sorts out the authority of states to raise
revenues independently.

110
COOPERATIVE FEDERALISM; EXAMPLES FOR AUSTRALIA FROM ABROAD
John O. McGinnis Available at - http://www.menziesrc.org/research/McGinniss-Federalism-talk.pdf
111
Richard B. Stewart, Pyramids of Sacrifice? Problems of Federalism in Mandating State
Implementation of National Environmental Policy, 86 YALE L. J. 1196 (1977)
Canadian federalism as a general matter is somewhat friendlier to the autonomy of states than
either Australia or the United States. I attribute this largely to the presence of Quebec. One needs
stronger guarantees of federalism if one is going to protect a distinctive culture that dominates a
substantial locality. I believe that this influence has been good for constitutional federalism,
reserving more areas to provinces in Canada than are reserved for the states in the United States.

The relevance for our subject of cooperative federalism, however, is that the federal government
has fewer exclusive responsibilities, thus opening up areas for cooperative federalism that are
unknown in the United States. For instance, Canada has cooperative federalism in some
immigration matters, whereas in United States immigration is wholly a federal responsibility. In
particular, Quebec has undertaken substantial immigration responsibilities. In my view, this
aspect of Canadian federalism also illustrates a danger. Federalism is not about giving more
rights to states, but splitting up responsibilities in a way that maximizes benefits to the people as
a whole. The question of immigration ultimately bears on the nature of the entire nation, as, once
in a state, immigrants can move freely around. Thus, in thinking about cooperative federalism, it
remains important to preserve clear and undiluted federal responsibility in areas of distinctively
national concern.
Conclusion

In a federation, it is not unusual to have several political parties controlling various governments.
To some extent, federalism may be likened to the fundamental rights. Just as the fundamental
rights safeguard individual freedom against encroachment by the government, so also
federalism seeks to maintain local identity against national policies. But then a balance has to be
drawn between the two; regionalism cannot be pressed beyond the point when it becomes a
threat to national integrity.112

This essential point has to be kept in view by the State Governments in shaping and moulding
their relationship with the Centre. For years to come, the Centre has to play a dynamic role of
leadership if the country is to make rapid strides. Though the Constitution provides adequate
powers to the Centre to fulfill its role, yet, in actual practice, the Centre can maintain its
dynamism and initiative not through a show of its powers – which should be exercised only as a
112
M.P.Jain, Some Aspects of Indian Federalism,
last resort in a demonstrable necessity - but on the co-operation of the States secured through the
process of discussion, persuasion and compromises. All governments have to appreciate the
essential point that they are not independent but interdependent, that they should act not at cross-
purposes but in union for the maximisation of the common good.

On administrative relations, Sarkaria made the following observation: "Federalism is more a

functional arrangement for cooperative action, than a static institutional concept. Article 258
(power of the Union to confer powers etc on states in certain cases) provides a tool by the liberal
use of which cooperative federalism can be substantially realised in the working of the system. A
more generous use of this tool should be made than has hitherto been done, for progressive
decentralisation of powers to the governments of the states."