The Supreme Court, widening Congress' authority to place conditions on the use of federal money, today upheld a law that forced states to raise the drinking age to 21 or lose millions in highway dollars.
On a 7-2 vote, the court affirmed the U.S. 8th Circuit Court of Appeals in holding that the law does not violate the 21st Amendment that repealed Prohibition and gave the states the power to regulate liquor sales.
Chief Justice William H. Rehnquist said that while Congress' power to control federal money is not unlimited, it can be used in the pursuit of the "general welfare."
"In considering whether a particular expenditure is intended to serve general public purposes, courts should defer substantially to the judgment of Congress," Rehnquist wrote for the court.
While Congress may lack the power to directly impose a national drinking age, Rehnquist said, "we conclude that encouragement to state action . . . is a valid use of the spending power."
"Congress found that the differing drinking ages in the states created particular incentives for young persons to combine their desire to drink with their ability to drive, and that this interstate problem required a national solution," he said.
Justices William J. Brennan Jr. and Sandra Day O'Connor dissented.
Former South Dakota Atty. Gen. Mark Meierhenry, who brought the case to the Supreme Court, called the ruling a blow to states' rights. "It means that Congress' control of the purse string is pretty much unlimited," he said. "That's a dangerous thing. States will pay the price for it."
The case involved legislation passed by Congress in 1984 that directed the secretary of transportation to withhold a portion of federal highway construction funds unless states raised their drinking age to 21 by October, 1986.
The law authorizes the withholding of 5% of the funds in 1987 and 10% in 1988.
The state of South Dakota argued that the legislation violated a state's right to decide for itself how best to regulate the sale of alcoholic beverages.
Forty-six states and the District of Columbia have a drinking age of 21, and South Dakota and Colorado have passed laws that have yet to take effect. Only Ohio and Wyoming have not complied.
In another decision that could force a major overhaul in state business taxes, the court struck down a Washington state tax that it said unconstitutionally favored in-state businesses over out-of-state ones.
The court ruled 6 to 2 that the Washington tax discriminates unconstitutionally against interstate commerce. The justices said that through an exemption procedure the levy is assessed only on products manufactured in Washington that are sold to out-of-state customers.
The ruling is expected to create difficulty for many states that exempt in-state manufacturing, at the same time not giving credit to companies for taxes paid in other states on parts of the manufacturing process.