Subdivisions, standing and the supremacy clause: can a political subdivision sue its parent state under Federal law?

• Author: Keenan, Brian P.

TABLE OF CONTENTS INTRODUCTION I. SUITS BASED ON THE SUPREMACY CLAUSE ARE PERMITTED BECAUSE THE CASES IN THE TRENTON LINE WERE LIMITED TO THE CONSTITUTIONAL CLAUSES IN QUESTION II. EACH SUIT BY A POLITICAL SUBDIVISION AGAINST ITS PARENT STATE SHOULD BE DECIDED ON THE CONSTITUTIONAL MERITS, NOT ON STANDING III. FEDERALISM SUPPORTS ALLOWING SUITS IV. A SUBDIVISION'S NEED TO PROTECT ITSELF SUPPORTS ALLOWING SUITS V. THE NATURE OF THE SUPREMACY CLAUSE ALONE IS THE PROPER RATIONALE FOR ALLOWING POLITICAL SUBDIVISIONS TO SUE THEIR PARENT STATES A. The Tenth Circuit's Rationale Misreads the Precedent B. The Fifth Circuit Comes Closer to the Mark, but Still Falls Short C. The Supremacy Clause Itself Provides the Rationale for Suits CONCLUSION INTRODUCTION

Municipal government is often the closest level of government to the people, who look to their local government for police and fire protection, to maintain the roads and streetlights, and to collect the garbage. While relatively few people have regular contact with federal regulatory agencies, almost everyone has received a parking ticket from his local government. Few stop to think, however, about the role these political subdivisions of states play in our federal system. They offer a miniature version of federalism on the state level, dividing the power of the state and placing many important decisions in the hands of representatives closer to the people. Although cities, counties, and school districts substantially affect the lives of the average citizen, their relationship to state governments under the Federal Constitution is far from clear. States create political subdivisions, and thus have broad powers over them, but subdivisions do not always agree with their parent states' actions. Constitutional problems emerge when a subdivision thinks the laws of its parent state conflict with the Constitution or with federal law. Can the subdivision turn to the federal courts and federal law for protection from its parent state?

Hunter v. City of Pittsburgh (1) is a leading example of Supreme Court jurisprudence on municipalities. The Pennsylvania statute at issue in the case authorized the larger of two contiguous cities to annex the smaller. (2) Pittsburgh followed the statutory procedures to annex Allegheny and the annexation passed the referendum required by the statute. (3) Residents of Allegheny and the Allegheny city government filed suit to stop the annexation, lost in the Pennsylvania courts, and appealed to the Supreme Court. (4) The plaintiffs pursued theories that the annexation impaired a contract between the municipal corporation and its taxpayers (5) and that the enlarged city would subject them to higher taxes, thus depriving them of property without due process of law. (6) The Court upheld the annexation because of the broad authority given to states to create and manage their political subdivisions, which are "created as convenient agencies for exercising such of the governmental powers of the state as may be entrusted to them." (7) The state decides the nature and extent of the powers of a political subdivision, so it "may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies, expand or contract the territorial area, unite the whole or part of it with another municipality, repeal the charter or destroy the corporation." (8) Because the state controls its subdivisions' borders and powers to make contracts, it can modify a subdivision's borders or contracts without violating the Constitution.

City of Trenton v. New Jersey, (9) the other leading case in this area, was a suit by a subdivision against its parent state. Trenton purchased the right to draw water from the Delaware River from a water company, which had received the right by grant from the state. (10) The state subsequently required all entities drawing water from rivers to pay a fee if they drew over a specified amount. (11) The city protested that the fee impaired the contract it had with the water company and deprived the city of property without due process of law. (12) The Court followed the reasoning in Hunter in denying the city's claim, saying, "[t]he power of the state, unrestrained by the contract clause or the Fourteenth Amendment, over the rights and property of cities held and used for 'governmental purposes' cannot be questioned." (13)

While political subdivisions clearly play a subordinate role to states in the federal system, they are not completely subject to the whims of the state legislatures. For example, a state may revoke the charter of a political subdivision, but it must preserve a means for the subdivision's creditors to satisfy their claims. (14) The Court has also recognized some limits to states' broad authority over determining the boundaries of their subdivisions. The Supreme Court reversed a finding of summary judgment in favor of the Alabama Legislature in a suit that challenged its new boundaries of Tuskegee, which excluded all but four African-American citizens from the city by changing the city's shape from a square to a "strangely irregular twenty-eight-sided figure." (15) The Court held that this redrawing of the boundaries of a city stated a cause of action for violation of the African-American residents' voting rights under the Fifteenth Amendment. (16) In doing so, the Court limited the holdings of Hunter and Trenton, explaining:

a correct reading of the seemingly unconfined dicta of Hunter and kindred cases is not that the State has plenary power to manipulate in every conceivable way, for every conceivable purpose, the affairs of its municipal corporations, but rather that the State's authority is unrestrained by the particular prohibitions of the Constitution considered in those cases. (17) The state's power over its political subdivisions is therefore not completely unlimited.

These seemingly conflicting precedents have produced confusion in the federal circuit courts of appeals when a political subdivision sues its parent state. Some circuits follow a per se rule that political subdivisions cannot sue their parent states under any constitutional provision. (18) Other circuits have reexamined the Hunter and Trenton precedents and now allow suits by political subdivisions (19) based on the Supremacy Clause. (20) Others have noted the confusion and avoided taking a stand on the issue, (21) and the Second Circuit has taken an ambiguous stance. (22)

The Ninth Circuit has taken the lead in advancing a per se rule prohibiting political subdivisions from suing their parent states, most recently in Palomar Pomerado Health System v. Belshe. (23) Palomar Pomerado, a health care district created by California, sued the state, claiming that the state regulations for reimbursements for care given to those insured under California's Medi-Cal program compensated the district less than required by federal Medicaid law. (24) The Ninth Circuit ruled that, as a political subdivision, Palomar Pomerado "lacks standing to bring an action against the state in federal court--at least to the extent that its action challenges the validity of state regulations on due process and Supremacy Clause grounds." (25) The Sixth Circuit follows a similar per se rule. (26)

Two circuits allow suits by political subdivisions against their parent states based on the Supremacy Clause. (27) The Fifth Circuit was the first to allow suits of this kind when it permitted a school district to challenge a Texas statute requiring school districts to participate in the federal school breakfast program if they had one school where ten percent of students were eligible for the federal program. (28) Unlike the Ninth Circuit, the court held that the issue was not one of standing. (29) The court read the Hunter and Trenton line of cases as standing for "the substantive holdings that the Constitution does not interfere in a state's internal political organization." (30) The school district was able to proceed with its suit because its claim was "that Congress, exercising its power under Article I, has interfered with Texas's internal political organization" and was not based on the Constitution itself. (31) The court found that the school district met the "criteria normally governing standing to sue in federal court." (32) The Tenth Circuit joined the Fifth Circuit in allowing suits based on the Supremacy Clause, holding that suits by subdivisions based on the structural protection of the Supremacy Clause were not precluded by Trenton, which barred only suits based on protections of individual rights, such as those guaranteed by the Fourteenth Amendment and the Contract Clause. (33)

This Note argues that political subdivisions should be able to seek protection from their parent states under the Supremacy Clause when alleging a conflict between state law and any federal law, be it the Constitution, treaty, or a federal statute. Part I argues that the precedential cases like Hunter and Trenton were limited to the constitutional provisions in question and therefore did not bar all suits under the Supremacy Clause. Part II shows that the issue is one of constitutional protection of political subdivisions, rather than Article III standing, which had a completely different meaning when Hunter and Trenton were decided. Part III finds that suits based on the Supremacy Clause best fit into the dual nature of our federalist system and rejects some possible counterarguments based on the idea of state sovereignty. Part IV shows that subdivisions' need to protect themselves supports allowing them to sue their parent states. Part V examines the proper rationale for Supremacy Clause suits by political subdivisions and rejects the reasoning of the Fifth and Tenth Circuits, advocating instead a rationale based solely on the nature of the Supremacy Clause.

1. SUITS BASED ON THE SUPREMACY CLAUSE ARE PERMITTED BECAUSE THE CASES IN THE...