In the case of Garcia v. San Antonio Metropolitan Transit Authority, 1984, the U.S. Supreme Court ruled that Congress has the authority to apply Fair Labor Standards Act (FLSA) provisions to state and local governments under its Commerce Clause powers. The San Antonio Metropolitan Transit Authority (SAMTA), a public mass transit system in Texas, claimed it was immune from FLSA regulations due to intergovernmental immunity doctrine which protects states from federal regulation unless Congress specifically overrides this protection. However, SAMTA's claim was rejected by the court with a 5-4 decision stating that there is no constitutional barrier preventing Congress from applying FLSA wage and hour laws to state and municipal employees as they are involved in commercial activities affecting interstate commerce. This ruling overturned National League of Cities v Usery (1976) where it had been held that application of FLSA standards on states violated "traditional governmental functions" principle.

In the dissenting opinion for Garcia v. San Antonio Metropolitan Transit Authority, Justice Powell argued that the majority's decision to allow Congress to apply federal labor laws to state and local governments was a significant departure from established principles of federalism. He contended that this ruling undermined states' rights and autonomy by allowing the federal government to impose its will on them in areas traditionally reserved for state control, such as public employment matters. Furthermore, he expressed concern about potential negative impacts on governmental functions at both levels due to increased costs associated with compliance with these laws. In his view, this case represented an overreach of Congressional power under the Commerce Clause which could lead towards centralization of power in Washington D.C., thereby threatening our system’s delicate balance between national authority and states’ sovereignty.