Federalism in the United States: Dividing Authority Between National and State Governments

Federalism as a Practical Allocation of Responsibilities

Federalism is a system for dividing governing authority between the national government and state governments so that public problems can be handled at the level best suited to them. In practice, federalism answers questions like: Who sets the rule? Who pays for it? Who enforces it? Many policy areas involve more than one level of government, so federalism is less about “either/or” and more about “who does what, and what happens when rules collide.”

1) Types of Powers: Who Can Do What?

In U.S. federalism, authority is commonly organized into four categories. Treat these as a classification tool you can apply to real policy questions.

Enumerated Powers (National Government)

Definition: Powers specifically granted to the national government. When a policy goal fits within an enumerated power, Congress can legislate nationally, and federal agencies can implement within that scope.

• Transportation (interstate): Setting nationwide safety standards for commercial trucking that crosses state lines; regulating airline safety; rules for interstate rail shipments.
• Public health (cross-border): Regulating pharmaceuticals distributed nationally; rules for disease screening at international borders; national standards for medical products shipped across states.
• Education standards (indirect): The national government typically does not run local schools, but it can influence education through funding and civil rights enforcement (for example, nondiscrimination requirements tied to federal funds).
• Criminal law (federal crimes): Crimes tied to national interests or interstate activity (e.g., trafficking across state lines, crimes on federal property, certain financial crimes).

Practical test: If the policy is about national markets, cross-state movement, national security, federal property, or nationwide standards for goods/services moving across states, it often fits national enumerated authority.

Reserved Powers (States)

Definition: Powers not delegated to the national government are kept by the states. These are often called “police powers” in practice: protecting health, safety, and welfare within the state.

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• Education standards (core): Setting curriculum frameworks, graduation requirements, teacher credentialing rules, and school district governance (subject to federal civil rights rules and funding conditions).
• Criminal law (most day-to-day): Defining and prosecuting most crimes like burglary, assault, and many traffic offenses; setting sentencing ranges (within constitutional limits).
• Public health (local): Restaurant inspections, state vaccination requirements for school attendance, licensing health professionals, managing state health departments.
• Transportation (intrastate): Driver licensing, vehicle registration, speed limits on state roads, state-level transit planning.

Practical test: If the policy is primarily local, within-state, and about everyday health/safety/welfare, it is usually state-led unless federal law validly occupies the field or sets a conflicting rule.

Concurrent Powers (Both National and States)

Definition: Powers that both levels can exercise. In these areas, the key question becomes how conflicts are resolved and whether federal law preempts state law.

• Transportation: Both can fund and build infrastructure (federal interstate funding; state highways and bridges). Both can regulate safety in different ways (federal vehicle manufacturing standards; state driving rules).
• Public health: Federal agencies may set national product standards and fund programs; states run many on-the-ground health systems and can add protections if not preempted.
• Criminal law: Some conduct can violate both state and federal law (e.g., certain drug trafficking). Separate sovereigns can have separate statutes and enforcement priorities.
• Education: States run schools; the national government can enforce civil rights and attach conditions to federal education funds.

Practical test: If both levels have a plausible reason to act—national baseline plus local tailoring—treat it as concurrent and then check for preemption/conflict rules.

Prohibited Powers (Denied to One or Both Levels)

Definition: Certain actions are forbidden to states, to the national government, or to both. In federalism terms, this often matters when a state tries to act like a separate nation or when any government tries to violate protected rights.

• States (examples): Cannot make treaties with foreign countries; cannot coin money; cannot impose certain kinds of tariffs on imports/exports without consent.
• National government (examples): Cannot commandeer state legislatures to pass federal laws; cannot take actions outside its delegated authority.
• Both levels (examples): Cannot pass certain kinds of laws that violate constitutional protections (for example, laws that deny due process).

Practical test: If the policy would turn a state into an independent actor in foreign affairs, or would violate constitutional protections, it is likely prohibited regardless of policy goals.

Quick Classification Table

2) How Federal and State Laws Interact: Clear If/Then Rules

When both levels can act, the practical question becomes: what happens if rules overlap or conflict? Use these decision rules.

Rule Set A: Supremacy and Preemption (Conflict Management)

Core idea: Valid federal law can override state law. This is often described as federal “preemption” of state law.

• If Congress clearly says “states may not regulate this area,” then state laws in that area are preempted (often called express preemption).
• If federal regulation is so comprehensive that it leaves no room for states, then state laws may be preempted even without explicit words (often called field preemption).
• If it is impossible to comply with both federal and state rules, then the state rule is preempted (often called conflict preemption).
• If the state rule frustrates the purpose of the federal scheme (even if dual compliance is technically possible), then the state rule may be preempted (often analyzed as a form of conflict/obstacle preemption).

Concrete examples:

• Transportation: If federal law sets a nationwide manufacturing standard for vehicle safety equipment, a state cannot require a conflicting design for the same equipment. If the state adds a non-conflicting rule (e.g., driver behavior), it may be allowed.
• Public health products: If a federal agency approves labeling requirements for a drug and Congress preempts different state labeling mandates, a state cannot impose a contradictory label. States may still regulate prescribing practices and provider licensing if not preempted.
• Criminal law: If federal law criminalizes a certain interstate trafficking activity, states can still criminalize similar conduct under state law, but federal enforcement does not depend on state permission.

Rule Set B: Cooperative Federalism (Shared Implementation)

Core idea: The national government sets goals or minimum standards, and states implement day-to-day administration—often with federal funding and oversight.

• If a federal program offers states a choice to administer a program under federal standards, then states can opt in and run it (often through state agencies) while meeting federal requirements.
• If a state opts in, then it must follow the federal conditions attached to participation (reporting, eligibility rules, enforcement benchmarks).
• If a state opts out, then the federal government may administer the program directly or use alternative mechanisms, depending on the statute.

Concrete examples:

• Public health: A federal program funds disease surveillance; states collect data and run local response plans under shared standards.
• Transportation: Federal highway funds support state projects; states design and build projects while meeting federal safety, environmental, and procurement rules.
• Education: Federal funds support specific student services; states and districts implement programs while meeting federal accountability or nondiscrimination conditions.

Rule Set C: When States Can Go Further (Floors vs. Ceilings)

Many federal laws set a minimum floor (states may add protections) while others set a maximum ceiling (states may not add different or stricter rules).

• If federal law sets a minimum standard and does not preempt stricter state rules, then states may adopt stronger protections.
• If federal law is intended as a uniform national standard and preempts additional state requirements, then states cannot go beyond it in that domain.

Practical step-by-step: checking interaction

1. Identify the policy domain: transportation, education, criminal law, public health, etc.
2. Classify the power: enumerated, reserved, concurrent, or prohibited.
3. Check for a federal statute/regulation: Is there a federal rule on point?
4. Ask whether Congress preempted state law: express words, comprehensive scheme, or conflict.
5. Decide floor vs. ceiling: can the state add protections or is uniformity required?
6. Determine the operational result: state rule applies, federal rule applies, both apply, or state rule is displaced.

3) Fiscal Federalism Basics: How Money Shapes Policy

Fiscal federalism is the use of funding to influence what governments do. Even when states have primary authority, federal dollars can change state choices because budgets shape what is feasible.

Grants-in-Aid: The Main Tool

Definition: Federal funds provided to states/localities for specific purposes.

• Categorical grants: Targeted to a specific program area with detailed rules (e.g., funds for highway safety improvements with compliance requirements).
• Block grants: Broader purpose with more state flexibility (e.g., funds for a general public health initiative where states choose specific interventions within guidelines).
• Matching grants: Federal funds require states to contribute a percentage, encouraging states to spend more in that area.

Conditions and Incentives

Funding often comes with requirements. These requirements can function like policy levers.

• If a state accepts a grant, then it must comply with the grant’s conditions (reporting, standards, eligible uses, auditing).
• If a state does not want the conditions, then it can decline the funds—but must replace the money or scale back the program.
• If the federal government wants to encourage a policy without directly regulating, then it can offer extra funds, bonuses, or favorable matching rates for states that adopt certain practices.

Why funding shapes policy choices:

• Capacity: Federal funds can pay for staff, technology, and enforcement that states could not otherwise afford (e.g., upgrading public health labs).
• Standardization: Conditions can push states toward common benchmarks (e.g., transportation safety data reporting formats).
• Tradeoffs: States may adjust priorities to secure funds, sometimes shifting resources away from non-funded areas.

Practical Example: Following the Money

Suppose a state wants to improve road safety.

1. The federal government offers a grant for highway safety improvements.
2. The grant requires adopting specific safety reporting and enforcement benchmarks.
3. The state compares: (a) accept funds and implement required benchmarks; or (b) decline funds and pursue its own plan with fewer resources.
4. If the state accepts, the policy outcome is shaped by both state choices and federal conditions—an example of fiscal federalism driving cooperative federalism.

Scenario-Based Classification Tasks

Use the tasks below to practice (1) identifying which level(s) of government can act and (2) predicting what happens if state and federal rules conflict. For each scenario, answer in two steps: Step A: classify the power (enumerated/reserved/concurrent/prohibited). Step B: apply interaction rules (preemption/cooperative/floor vs. ceiling).

Task Set 1: Transportation

• Scenario 1: A state sets a speed limit on a state-maintained rural highway.
  Your job: Identify who can act and why.
• Scenario 2: The federal government sets nationwide safety standards for commercial trucks that travel across state lines. A state passes a different standard for the same truck equipment that would require a different design.
  Your job: Decide whether the state rule stands or is displaced, using if/then preemption rules.
• Scenario 3: A state wants federal funds to rebuild bridges and agrees to federal procurement and safety conditions.
  Your job: Identify the federalism type involved and what accepting funds requires.

Task Set 2: Education Standards

• Scenario 4: A state board of education adopts new graduation requirements and a statewide civics exam.
  Your job: Classify the power and identify the primary level of government.
• Scenario 5: A school district receives federal education funds. The federal program requires nondiscrimination compliance and specific reporting. The district wants to ignore the reporting requirement.
  Your job: Apply the if/then rule for grant conditions.
• Scenario 6: A state creates a scholarship program but adds eligibility rules that conflict with a federal nondiscrimination requirement tied to federal funds the state accepts.
  Your job: Predict what happens to the conflicting state rule.

Task Set 3: Criminal Law

• Scenario 7: A city enforces local ordinances against petty theft and vandalism.
  Your job: Identify which level primarily acts and why.
• Scenario 8: A person runs an online fraud scheme targeting victims in multiple states. Both federal and state prosecutors have statutes that could apply.
  Your job: Classify the power and explain how both levels can have authority.
• Scenario 9: A state passes a law that attempts to block federal agents from enforcing a valid federal criminal statute within the state.
  Your job: Use supremacy/preemption logic to determine the result.

Task Set 4: Public Health

• Scenario 10: A state health department requires restaurants to post food safety grades and conducts inspections.
  Your job: Classify the power and level of government.
• Scenario 11: The federal government sets national labeling rules for a widely distributed medication. A state requires a contradictory warning label for the same medication packaging.
  Your job: Apply conflict preemption: can both rules be followed?
• Scenario 12: A federal public health grant offers extra funding if states adopt a standardized disease reporting system. A state adopts the system to receive the higher match rate.
  Your job: Identify the fiscal federalism mechanism and explain how incentives shape policy choices.

Answer Framework (Use This to Self-Check)

For each scenario: 1) Power classification: enumerated / reserved / concurrent / prohibited 2) Who can act: federal / state / both / neither 3) If conflict: a) express preemption? b) field preemption? c) conflict (impossible to comply)? d) obstacle to federal purpose? 4) If funding involved: a) grant type (categorical/block/matching) b) conditions accepted? c) incentive effect on state choices