Petition for Writ of Certiorari — Tennessee v. Department of Transportation, Research & Special Programs Administration

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OS 111 JUL 18 2003

No.

In The

Supreme Court of the United States

STATE OF TENNESSEE, and

TENNESSEE DEPARTMENT OF

ENVIRONMENT AND CONSERVATION,

Petitioners,

v. .

UNITED STATES DEPARTMENT OF

TRANSPORTATION, RESEARCH AND

SPECIAL PROGRAMS ADMINISTRATION,

and ASSOCIATION OF WASTE

HAZARDOUS MATERIALS TRANSPORTERS,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI

PAUL G. SUMMERS

Attorney General and Reporter

State of Tennessee

MICHAEL E. MOORE

Solicitor General

BARRY TURNER*

Deputy Attorney General

425 Fifth Avenue North

Nashville, Tennessee 37243

(615) 532-2586

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Under the Hazardous Materials Transportation Act,

specifically 49 U.S.C. § 5125(d\(1), a private party with

standing may commence an administrative proceeding

against a State to obtain a decision from the United States

Department of Transportation about whether the State’s

law is preempted. Congress intended the agency's preemp-

tion decision to be binding on the State. Is a § 5125(d)(1)

proceeding agency adjudication barred by state sovereign

immunity under this Court’s decision in Federal Maritime

Comm’n v. South Carolina State Ports Authority, 535 U.S.

743 (2002)?

LIST OF PARTIES

All of the parties to this civil case are named in the cap-

tion.

There are no entities to report or list in accordance with

Supreme Court Rule 29.6.

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TABLE OF CONTENTS

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CITATIONS OF THE OPINIONS AND ORDERS

ENTERED IN THE CASE 000... eoeeceececeecee cece. 1

STATEMENT OF THE BASIS FOR JURISDIC-

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CONSTITUTIONAL PROVISIONS INVOLVED IN

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STATEMENT OF THE CASE... ooeccececcccecececcc 2

REASONS FOR GRANTING THE 5 ee 8

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TABLE OF AUTHORITIES

Page

CASES

Alden vu. Maine, 527 U.S. 706 (1999) .............ccceeeeeeees passim

Allstate Insurance Co. v. Phillips Leasing Co., 214

PB. BIS CHD. GBD. TB). ecvecvscericcnsessensnsosrsccosevevesens 17

Colorado Public Utilities Comm’n v. Harmon, 951

PG, LETS CRG Cie. TOBE) ccc ecescccerccesevsshocnssniaconsesssoseesess 11

Federal Maritime Comm’n v. South Carolina State

Ports Authority, 535 U.S. 743 (2002)................eeee passim

Pension Benefit Guaranty Corp. v. LTV Corp., 496

cae, Se ER creiinnnrencissersdhichinkneincesiniaaiocaomaaomaana 15

Puerto Rico Aqueduct and Sewer Authority uv.

Metcalf & Eddy, inc., 506 U.S. 139 (1993) .......... eee 2

Seminole Tribe of Florida v. Florida, 517 U.S. 44

(BEEF icisscinnisunisinintnisncesdininsiasianionsinatninuneenianaasadppadiniibaninneamaicaaian 19

South Carolina State Ports Authority v. Federal

Maritime Comm’n, 243 F.3d 165 (4th Cir. 2001),

Oh, GEE GB. TOD COE) ane yncerssessnsscennsrersensocssssseesasovsives 18

Tennessee Dept. of Human Services v. U.S. Dept. of

Education, 979 F.2d 1162 (6th Cir. 1992) ......... eee 7

Tennessee v. U.S. Dept. of Transportation, 326 F.3d

Fe Ce Ge UD eatideeniccctesnncerensncsenseesesncsnabemeninien passim

Ulman v. United States, 558 F.2d 1 (Cl. Ct. 1977)............ 24

Yesler Terrace Community Council v. Cisneros, 37

Pe GE Ce Ge Be iecesencctntcnintintccncnnnenstunevicnensneneinanin 21

Witherow v. Larken, 421 U.S. 35 (1975) ......... cee eee eee 18, 19

TABLE OF AUTHORITIES - Continued

Page

FEDERAL STATUTES AND RULES

Put L. 101-615, § 13, 104 Stat. 3244, 3260 (1990)........... 10

GUS.C. § 55164) (1906)... .sesccsssssssesessesesseosesseoseoessss..... 21

OB. FROG) (SOO ooo cesssrssostiinrcetdornessnccesccecc tl 21

5 U.S.C. § 551(7) (1996) ..........sccssssssessssssssssssssssseeseseeecce.... 21

5 U.S.C. § 553(e) SUED <tssecssaciesttanteinbasiioaa ie eet 22, 23

5 U.S.C. § 554(a) i ETE ATE” 16

©. BOE CBI iesconcssccnivssinisitchisiensionumsesinten 6

28 U.S.C. § 1254(1) (1993) ....eecccccccsssssssssssssesesesseeeeecc 2

42 U.S.C. § 9601(14) LAUT iscunstainsbjaticonenaendeanmnan eae 3

49 U.S.C. § 5119(€) (1997)..........cscssssssesssssssssssssesseseeoeccs.... 20

49 U.S.C. § 5123(a)(1) FT Pacrsceleiessnckdsciornusaasance ee 24

49 U.S.C. § 5125(d)(1) (1997)... eecscecccsssescssseeeooess... passim

49 U.S.C. § 5125(d)\(3) LMR tae ne At, 10, 11, 17

49 U.S.C. § 5125(f) (1997)... cccccssessssesscsssseecsesseeecccs 10, 12

49 U.S.C. § 5125(g)(1) {PEP sextcsstemiinbeaaumae ee 5

49 C.F.R. § 107.203 EI *cinnnitnibisitetpaincaa eee 15

49 C.FR. § 107.203(€)(4) (2002).........ccescecsesssecsseeeeecseesccc... 12

49 C.F.R. § 107.203(a)(5) I sciirinstakiii chalet ane 11

49 C.F-R. § 107.205 ivinsinniintiiie ae 15

49 C.F.R. § 107.205(a) PD eneetiictitenoacanasas ee 4,12

49 C.F.R. § 107.205(b) Fe ccrsienisiniithisap classe ee 22

49 C.F.R. § 167.207(a) ED Hnrnenisisiecesnaanen aaa 16

49 C.F.R. § 107.207(b) Fi ETE Ee. le

TABLE OF AUTHORITIES — Continued

Page

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STATE STATUTES AND RULES

Tenn. Code Ann. § 68-212-102(1) (2001)......... cee 2

Tenn. Code Ann. § 68-212-104 (2001) ......... cee cecceeeceeeeeeeeeee 3

Tenn. Code Ann. § 68-212-108(a) (2001)..............cccceeeeeeeees 2

Tenn. Code Ann. § 68-212-202(2) (2001).............cccsseeseeeeeees 3

Tenn. Code Ann. § 68-212-202(3) (2001)...........ccceceeeeeeeeees 3

Tenn. Code Ann. § 68-212-203(a)(6)(C) (2001)... 3

Tenn. Code Ann. § 68-212-204 (2001) 0.0... eeeeeeeeeeeeeees 3

Tenn. Code Ann. § 68-212-205 (2001) 0.0... ee eeceseeseeeeeees 3

Tenn. Code Ann. § 68-212-205(b) (2001)...........c eee eeeeee eee 3

Tenn. Comp. R. & Regs., ch. 1200-1-13-.03(1)(e)

CINE TI s<csissnsisssvnevatcssasonsvenctnbenelaniniebmmnnianansaaaaaiaiaa 3

OTHER AUTHORITY

H.R. Rep. No. 101-444(]D, 101st Cong., 2nd Sess.

oe SAREE NER SiC NSCOR SR NE a

AT a aN. AN STI a a, ae as

CITATIONS OF THE OPINIONS AND

ORDERS ENTERED IN THE CASE

The opinion of the Sixth Circuit Court of Appeals is

published. Tennessee v. U.S. Dept. of Transportation, 326

F.3d 729 (6th Cir. 2003). The Sixth Circuit’s opinion and

the judgment order filed on April 23, 2003 are set forth at

Appendix pages 1-17.

The order of the United States District Court for the

Middle District of Tennessee rejecting the Magistrate

Judge’s report and recommendation is unpublished.

Tennessee, et al. v. U.S. Dept. of Transportation, et al., No.

3:99-1126 (M.D. Tenn., entered Feb. 27, 2001). The Magis-

trate Judge’s report and recommendation is unpublished.

Tennessee, et al. v. U.S. Dept. of Transportation, et al., No.

3:99-1126 (M.D. Tenn., filed Nov. 9, 2000). The District

Court’s order and the Magistrate Judge’s report and

recommendation are set forth at Appendix pages 18-82.

The preemption decision of the United States De-

partment of Transportation is published. Preemption

Determination No. 21(R), Tennessee Hazardous Waste

Transporter Fee and Reporting Requirements, Docket No.

RSPA-98-3665, 64 Fed.Reg. 54474 (Oct. 6, 1999). The

agency's ruling denying the State’s request for a stay of

the preemption decision pending judicial review is unpub- .

lished. The United States Department of Transportation’s

preemption decision and its ruling denying a stay are set

forth at Appendix pages 83-125.

STATEMENT OF THE BASIS FOR JURISDICTION

The Sixth Circuit Court of Appeals entered judgment

on April 23, 2003. No party sought rehearing. The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1), and under the collateral order doctrine. Puerto

Rico Aqueduct and Sewer Authority v. Metcalf & Eddy,

Inc., 506 U.S. 139 (1993).

CONSTITUTIONAL PROVISIONS

INVOLVED IN THE CASE

The sovereign immunity inherent in the United States

Constitution that precludes the States from being subject

to adjudicative proceedings commenced by private parties.

Federal Maritime Comm’n v. South Carolina State Ports

Authority, 535 U.S. 743 (2002); Alden v. Maine, 527 U.S.

706 (1999).

STATEMENT OF THE CASE

Tennessee’s Hazardous Waste Remedial Action Fee

Respondent, the Association of Waste Hazardous

Materials Transporters (AWHMT), is an association of

companies that transport hazardous waste throughout the

United States, including in Tennessee. App. at 98-99. In

order to protect the health, safety, and welfare of its

citizens, petitioner, the State of Tennessee, uses its police

powers to regulate the “safe storage, transportation,

treatment and disposal of hazardous wastes.” Tenn. Code

Ann. § 68-212-102(1) (2001) (emphasis supplied). Any

entity that seeks to transport hazardous waste to or from

locations within the state must obtain a hazardous waste

transporter permit from the Tennessee Department of

Environment and Conservation (TDEC). Tenn. Code Ann.

§ 68-212-108(a) (2001).

ee ee

Those issued a hazardous waste transporter permit

are required to pay annually a $650 remedial action fee.

Tenn. Code Ann. § 68-212-203(a)(6)\(C) (2001); Tenn. Comp.

R. & Regs., ch. 1200-i-13-.03(1)e) (May 2003). App. at

136, 147. The members of AWHMT transporting hazard-

ous waste to and from Tennessee are subject to the annual

remedial action fee.

The remedial action fees collected are placed in the

Tennessee Hazardous Waste Remedial Action Fund (the

Fund), which is a special account separate from the State’s

general fund. Tenn. Code Ann. § 68-212-204 (2001). TDEC

uses the Fund to investigate, contain, and clean up “inac-

tive hazardous substance sites.” Tenn. Code Ann. § 68-212-

205 (2001). These are sites where “hazardous substance

disposal has occurred.” Tenn. Code Ann. § 68-212-202(3)

(2001).

Hazardous substance is defined in Tennessee law as in

federal law. Tenn. Code Ann. § 68-212-202(2) (2001); 42

U.S.C. § 9601(14) (1995). Hazardous wastes are a subset

within the larger category of hazardous substances. A

“disposal” occurs when there has been a release or threat-

ened release of hazardous waste. Tenn. Code Ann. § 68-

212-104 (2001). In the context of hazardous waste trans-

portation, such a release or threatened release may occur

as the result of an accident, or as the result of an illegal

disposal by a transporter.

TDEC is authorized to use the monies in the Fund to

retain contractors to perform investigative and corrective

actions at inactive hazardous substance sites. Tenn. Code

Ann. § 68-212-205(b) (2001). This includes emergency

response. TDEC’s emergency response contractor is

available to address highway and/or rail incidents

involving the release or threatened release of hazardous

waste during transport.

The Proceeding Before The United States Depart-

ment Of Transportation

Under 49 U.S.C. § 5125(d)(1) of the Hazardous Mate-

rials Transportation Act (HMTA), a private party with

standing may file an application to commence a proceeding

before respondent, the United States Department of

Transportation (USDOT), to obtain a decision about

whether a State’s law is preempted by federal hazardous

materials transportation law.’ App. at 126. On March 23,

1998, AWHMT filed an application with USDOT asking

the agency to rule that Tennessee’s hazardous waste

remedial action fee and its written incident notification

requirement are preempted. App. at 91. Under USDOT’s

regulations, a “hazardous material” specifically includes

hazardous wastes. 49 C.F.R. § 171.8 (2002).

AWHMT served by mail a copy of its application for

preemption upon Tennessee, accompanied by the required

statement informing the State that it may submit to

USDOT a response to the application. 49 C.FR.

§ 107.205(a) (2002). The State submitted response and

rebuttal comments to USDOT. AWHMT also submitted

rebuttal comments:

* Authority to render preemption decisions under § 5125(d)(1) has

been delegated by the USDOT Secretary to the Associate Administrator

for Hazardous Materials Safety in the agency’s Research and Special

- Programs Administration. App. at 96.

UMMM a no eee

USDOT published notice of the AWHMT application

in the Federal Register, and invited comment. App. at 93.

In response to the notice, USDOT received comments on

the application from the Association of American Railroads

and the Hazardous Materials Advisory Council. Id.

On October 6, 1999, USDOT published in the Federal

tion Determination No. 21(R), Tennessee Hazardous Waste

Transporter Fee and Reporting Requirements, 64 Fed.Reg.

54474 (Oct. 6, 1999). App. at 90-125. In its decision,

USDOT ruled that Tennessee’s remedial action fee law is

preempted under HMTA § 5125(g)(1), which requires state

fees to be “fair and used for a purpose related to transport-

ing hazardous material, including enforcement and plan-

ning, developing, and maintaining a capability for

emergency response.” 49 U.S.C. § 5125(g)(1) (1997). App.

at 112, 117.

Applying a Commerce Clause taxation analysis,

USDOT held that Tennessee’s remedial action fee is not

“fair” under § 5125(g)(1), because it is not apportioned

based upon a transporter’s “use of roads or other facilities

within the State. ...” App. at 109. USDOT also held that

Tennessee’s remedial action fees have not been used to

maintain a “capability for emergency response” because

the fees already collected have not been completely

* USDOT also ruled that Tennessee’s written notification require-

ment is preempted. App. at 123. In its comments in response to the

application, while the State contested AWHMT’s preemption claims

regarding the remedial action fee, it conceded that the notification

requirement is preempted. Thus, the State did not seek judicial review

of this aspect of USDOT’s preemption ruling.

expended by the State, or segregated into a fund separate

from the remedial action fees paid by others involved in

hazardous waste management in Tennessee. App. at 116-

17.

In accordance with 5 U.S.C. § 705 (1996), the State

asked USDOT to stay the effectiveness of its preemption

decision, particularly in light of the sovereign immunity

decision that had just been rendered by this Court in

Alden v. Maine, 527 U.S. 706 (1999). USDOT denied the

stay request. App. at 83-89.

Proceedings In The District Court

On December 3, 1999, Tennessee filed a petition for

judicial review of USDOT’s decision that the State’s

remedial action fee law is preempted. In accordance with a

case management order, the parties filed cross motions for

judgment on the administrative record. The district court

referred the cross motions to a magistrate judge for a

report and recommendation for disposition.

In a November 9, 2000 report and recommendation,

the magistrate judge determined that the “doctrine of

sovereign immunity bars the administrative proceeding at

issue in this case.” App. at 81. The magistrate judge

concluded that Alden establishes that Congress is without

authority under Article I of the United States Constitution

to submit Tennessee to the private cause of action estab-

lished in HMTA § 5125(d)(1), regardless of whether that

action is adjudicated in a federal court, a state court, or an

administrative tribunal.’ App. at 79.

USDOT and AWHMT filed motions for a de novo

determination of the sovereign immunity issue by the

district court, and objections to the report and recommen-

dation. On February 27, 2001, the district court rejected

the report and recommendation and the State’s claim of

sovereign immunity. App. at 18-22. The court held that the

immunity issue is governed by the decision in Tennessee

Dept. of Human Services v. U.S. Dept. of Education, 979

F.2d 1162 (6th Cir. 1992). App. at 20-21. In Tennessee Dept.

of Human Services, the Sixth Circuit held that staie

sovereign immunity only applies to adjudication by the

Article III federal courts, and does not apply to non-Article

III tribunals such as “executive branch adjudicatory

bodies.” 979 F.2d at 1166.

On March 16, 2001, the State filed a notice of appeal

of the district court’s sovereign immunity ruling under the

collateral order doctrine. And on March 21, 2001, the

district court, sua sponte, entered an order staying further

proceedings pending resolution of the appeal.

The Sixth Circuit Court of Appeals’ Decision

The Sixth Circuit affirmed the district court’s sover-

eign immunity decision but on different grounds.* The

* Because of the magistrate judge’s decision on the sovereign

immunity issue, he did not reach the other issues in this matter.

' * Before the Sixth Circuit, the parties consented to the submission ‘

of an amicus curiae brief in support of USDOT and AWHMT by several

industry associations.

NL LP RIE? OCR IR,

appeals court did recognize that in light of Federal Mari-

time Comm’n v. South Carolina State Ports Authority, 535

U.S. 743 (2002), “the district court’s analysis in this case,

which rejected Tennessee’s claim of sovereign immunity

merely on the basis that the USDOT proceeding is admin-

istrative in nature, is no longer complete.” Tennessee v.

U.S. Dept. of Transportation, 326 F.3d 729, 734 (6th Cir.

2003). App. at 1-16. Nevertheless, the Sixth Circuit denied

the State’s sovereign immunity claim, holding that a

HMTA § 5125(d)(1) proceeding is not an “‘adjudication’ as

that term was used by” this Court in Federal Maritime

Comm’n. 326 F.3d at 734. App. at 12.

A § 5125(d)(1) proceeding is different, according to the

Sixth Circuit, because USDOT “is not required to hold a

hearing, and if a hearing is conducted, it is not bound by

the rules of evidence or civil procedure, nor is it-handled

by an administrative law judge.” 326 F.3d at 735. App. at

13. In addition, the court noted that USDOT’s preemption

decision does not provide for “injunctive relief” or “an

award of monetary damages” against the State. 326 F.3d

at 736. App. at 14-15. The Sixth Circuit concluded that a

§ 5125(d)(1) proceeding is actually rulemaking under the

Administrative Procedure Act. 326 F.3d at 734-35. App. at

12-13.

REASONS FOR GRANTING THE WRIT

“The preeminent purpose of state sovereign immunity

is to accord States the dignity that is consistent with their

status as sovereign entities.” Federal Maritime Comm'n,

535 U.S. at 760. In denying Tennessee’s claim of immunity,

the Sixth Circuit has decided an important federal

question in a way that conflicts with this Court’s decisions

in Alden and Federal Maritime Comm’n.

Congress clearly intended a § 5125(d)(1) proceeding to

be adjudicative, and the preemption decision rendered by

USDOT to be binding on a State. Alden establishes that

state sovereign immunity is not limited to adjudication

before Article III tribunals. And Federal Maritime Comm’n

holds that sovereign immunity bars formal agency adjudi-

cation of private claims against a State.

Although a § 5125(d)(1) proceeding is structured as

informal rather than formal agency adjudication under the

Administrative Procedure Act, it contains the essential

elements of an adjudicative proceeding identified by this

Court in Federal Maritime Comm’n. Accepting the notion

that sovereign immunity does not apply to an informal

adjudicative proceeding, such as the one commenced under

§ 5125(d)(1), means that Congress could authorize a

federal agency to informally adjudicate private claims

against a State under the Fair Labor Standards Act and

the Shipping Act, and then render a decision that is

binding on the State. That result would squarely conflict

with this Court’s decisions in Alden and Federal Maritime

Comm’n.

There is no principled constitutional basis for conclud-

ing that state sovereign immunity attaches to formal

adjudication but does not attach at all to informal adjudi-

cation. Such immunity becomes merely illusory if Con-

gress can exercise its Article I powers, as it has done in

§ 5125(d)(1), to authorize a federal agency, at the instance

of a private party, to render through informal adjudication

a binding decision that a State’s law is preempted.

Congress Intended A § 5125(d)(1) Proceeding To Be

Adjudicative And USDOT’s Preemption Decision

To Be Binding On The State.

In HMTA § 51% ‘d)(1), Congress provided that a

private party “directiy affected by a requirement of a

State... may apply to tne [USDOT] Secretary, as provided

by regulations prescribed by the Secretary, for a decision

on whether the requirement is preempted. ... The Secre-

tary shall issue a decision on an application for a

determination. ...” 49 U.S.C. § 5125(d)(1) (1997) (empha-

sis supplied). “A party to a proceeding under subsection (d)

... [may seek] judicial review of the decision of the Secre-

tary not later than 60 days after the decision becomes

final.” 49 U.S.C. § 5125(f) (1997).

Congress created the § 5125(d)(1) preemption proceed-

ing in the 1990 HMTA amendments. See Hazardous

Materials Transportation Uniform Safety Act of 1990, Pub.

L. 101-615, § 18, 104 Stat. 3244, 3260 (1990). In the same

amendments, Congress also provided that “instead of

applying to the Secretary,” a party directly affected by a

State requirement may seek “a decision on preemption

from a court of competent jurisdiction.” 49 U.S.C.

§ 5125(d)(3) (1997).

Agency adjudication under § 5125(d)(1) was intended

by Congress to be an alternative to a judicial preemption

suit against a State under § 5125(d)(3). As reflected in the

legislative history of the 1990 amendments, Congress

intended that “[pJarties may either file with the [USDOT]

Secretary or go to court, but not both.” H.R. Rep. No. 101-

444(I), 101st Cong., 2nd Sess. (1990), at 28, 1990 WL

259162.

: 11

Congress also intended USDOT’s preemption decision

under § 5125(d)(1) to be binding on a State. Prior to the

1990 HMTA amendments, USDOT had been rendering

what the agency called “inconsistency rulings.” These

rulings were “advisory opinion[s]” rendered by USDOT as

to whether a particular state or local law was preempted

by federal hazardous materials transportation law. Colo-

rado Public Utilities Comm’n v. Harmon, 951 F.2d 1571,

1575 (10th Cir. 1991).

The legislative history of the 1990 HMTA amend-

ments shows that Congress recognized that USDOT’s

inconsistency rulings were “advisory in nature and hal[d]

no binding effect on either States or political subdivisions

thereof.” H.R. Rep. No. 101-444(I), 101st Cong., 2nd Sess.

(1990), at 52, 1990 WL 259162. With the 1990 amena-

ments, Congress replaced “the inconsistency ruling process

with a binding administrative process for determining

whether State or local requirements are preempted.” Jd. at

28.

Congress intended a § 5125(d)(1) proceeding to be

adjudicative, and such proceedings are structured to

function as such. In the absence of a proper application

filed by a third party, USDOT has no authority under

§ 5125(d)(1) to decide if state law is preempted, just as a

court has no authority to render a preemption decision

under §5125(d)(3) in the absence of a properly filed

complaint. A party seeking to file an application for a

USDOT preemption decision must have standing, i.e., it

must be “directly affected by a requirement of a State.”

49 U.S.C. §5125(d\1) (1997). See also 49 CFR.

§ 107.203(a)(5) (2002).

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An application to commence a § 5125(d)(1) proceeding

must contain allegations of law and fact explaining why a

State’s law should be held to be preempted. 49 C.F\R.

§ 107.203(a)(4) (2002). The filing party must serve a copy

of the application by mail upon the State whose require-

ment is being challenged, accompanied by a statement

notifying the State that it may submit to USDOT a re-

sponse to the application. 49 C.F.R. § 107.205(a) (2002).

The party must certify in the preemption application filed

with USDOT that it has sent a copy of the application to

the State and include the name and address of the State

official to whom the application was sent. Id.

Under certain circumstances, USDOT “may dismiss

the application without prejudice.” 49 C.F.R. § 107.207(b)

(2002). But otherwise, Congress has mandated that

USDOT “shall issue a decision on an application.” 49

U.S.C. §5125(d)(1) (1997). USDOT’s decision is based

“C[uJpon consideration of the application and other relevant

information received.” 49 C.F.R. § 107.209(a) (2002). And

just as a court rendering a decision makes findings of fact

and conclusions of law, USDOT’s decision must set out

“the relevant facts and the legal basis for the determina-

tion.” 49 C.F.R. § 107.209(b) (2002).

As in a judicial proceeding, an “aggrieved” party may

timely petition USDOT for reconsideration of the agency’s

decision. 49 C.FR. § 107.211 (2002). Once USDOT’s

decision h*comes final, a “party to the proceeding” may

seek judicial review of the decision. 49 U.S.C. § 5125(f)

(1997); 49 C.F.R. § 107.213 (2002).

Sovereign Immunity Bars Informal Adjudication

By USDOT Of A Private Party’s Claim That A

State’s Law Is Preempted.

The States’ immunity under the federal constitution

extends to the adjudication of private claims before Article

I tribunals. This immunity bars adjudication by USDOT

under § 5125(d)(1) of a private party’s claim that a State’s

law is preempted.

Although a § 5125(d)(1) proceeding is structured as

informal, rather than formal agency adjudication, it

contains the essential elements of an adjudicative proceed-

ing as identified by this Court in Federal Maritime

Comm’n. Thus, it is the type of proceeding from which the

constitutional framers would have thought the States

possessed immunity when they agreed to enter the Union.

In Alden, this Court held that sovereign immunity

bars state court adjudication of private federal law claims

against a State. Alden makes clear that the sovereign

immunity enjoyed by the States under the federal consti-

tution neither derives from nor is limited by the Eleventh

Amendment and its restrictions on the Article III federal

courts. 527 U.S. at 713. Such immunity was implicit in the

fundamental postulates underlying the original constitu-

tional design:

[A]s the Constitution’s structure, and its history,

and the authoritative interpretations by this

Court make clear, the States’ immunity from suit

is a fundamental aspect of sovereignty which the

States enjoyed before the ratification of the Con-

stitution, and which they retain today (either lit-

erally or by virtue of their admission into the

Union upon an equal footing with the other

States) except as altered by the plan of the Con-

vention or certain constitutional Amendments.

Id. The States retained sovereign immunity except to the

extent they were required to surrender this power to

Congress. “This separate and distinct structural

principle is not directly related to the scope of the judicial

power established by Article III, but inheres in the system

of federalism established by the Constitution.” Id. (empha-

sis supplied).

Thus, Alden establishes that state sovereign immu-

nity applies to the adjudication of private claims before

non-Article III tribunals. Following Alden, the Court in

Federal Maritime Comm’n considered whether state

sovereign immunity barred a federal agency — the Federal

Maritime Commission (FMC) — from adjudicating a

private party’s complaint that South Carolina had violated

the Shipping Act of 1984. 535 U.S. at 747. The States could

not have consented to such an action in ratifying the

Constitution given “the fact that States were not subject to

private suits in administrative adjudications at the time of

the founding or for many years thereafter.” Jd. at 755.

The Court examined the FMC adjudications “to

determine if they are the type of proceedings from which

the Framers would have thought the States possessed

immunity when they agreed to enter the Union.” Id. at

756. The Court concluded that FMC adjudications are

such proceedings because they “bear a remarkably strong

resemblance to civil litigation in fedeal courts.” Id. at 757.

Although there are differences between a FMC adju-

dication and a USDOT adjudication under § 5125(d)(1),

both share the essential elements identified by the Court

a) Saeeeee es

a ai 2 as cal cir Ha ali hte

in Federal Maritime Comm’n. HMTA § 5125(d\ 1) proceed-

ings “are adversary in nature.” Jd. (citation omitted). As

noted, a § 5125(d)(1) proceeding may only be commenced

upon the filing of a proper preemption application by a

third party with standing.’ See 49 U.S.C. § 5125(d)(1)

(1997); 49 C.F.R. § 107.203 (2002).

The preemption determination is rendered by a

federal officer who exercises “independent judgment.” 535

U.S. at 756 (citation omitted). Parties are entitled to

present their arguments by “documentary evidence.” Id. at

757 (citation omitted). See 49 C.F.R. § 107.205 (2002). The

information received by USDOT during a § 5125(d)(1)

proceeding “constitutes the exclusive record for the deci-

sion.” 535 U.S. at 757 (citation omitted). See 49 C.FR.

§ 107.209(a) (2002). And the “parties are entitled to know

the findings and conclusions on all issues of fact, law ox

discretion presented on the record.” 535 U.S. at 757

(citation omitter). See 49 C.FR. § 107.209%a) and (b)

(2002).

Federal agency adjudication may be formal or infor-

mal. See, e.g., Pension Benefit Guaranty Corp. v. LTV

Corp., 496 U.S. 633, 655 (1990) (“[t]he determination in

this case, however, was lawfully made by informal adjudi-

cation”). The main difference between the administrative

proceeding considered in Federal Maritime Comm'n and a

§ 5125(d)(1) preemption proceeding is that the FMC

* USDOT acknowledges that only a party with standing may file a

preemption application. App. at 98-99.

* USDOT only functions as an adjudicator under § 5125(d)(1).

There is no provision authorizing the agency to participate as a

party/litigant in a § 5125(d)(1) proceeding.

proceeding is formal adjudication and the USDOT pro-

ceeding is informal adjudication.

Formal adjudication is mandated by the Administra-

tive Procedure Act (APA) when agency adjudication is

“required by statute to be determined on the record after

opportunity for an agency hearing....” 5 U.S.C. § 554(a)

(1996). Under the Shipping Act, the FMC rendered a

decision “after notice and hearing. ...” Federal Maritime

Comm’n, 535 U.S. at 749, n. 5.

A hearing is more likely to be required by statute

when the issues to be adjudicated by the agency are fact

intensive. And as a result, formal adjudication, like the

agency proceeding in Federal Maritime Comm’n, necessi-

tates the use of more elaborate practice and procedural

provisions. See 535 U.S. at 757-58.

In §5125(d)(1), Congress did not require an agency

hearing because a preemption adjudication does not

require extensive factual development. The issue of

whether a State’s law is preempted is primarily a question

of law, not fact, requiring the application of legal principles

established by this Court’s jurisprudence.

Under § 5125(d\(1), USDOT’s preemption decision is a

declaratory determination. The declaratory ruling that

results from a § 5125(d)(1) proceeding is comparable to a

declaratory judgment in a court of law. Declaratory pro-

ceedings in general are inappropriate for issues requiring

" While it is not required by statute, USDOT may “convene a

hearing” if it will advance the agency's evaluation of a preemption

application. 49 C.F.R. § 107.207(a) (2002).

ae een

extensive factual development. See, e.g., Allstate Insurance

Co. v. Phillip Leasing Co., 214 F.Supp. 273, 276 (W.D. S.D.

1963) (“‘o}rdinarily, a declaratory judgment will be

refused where to render same requires a judicial investi-

gation of disputed facts”).

A HMTA § 5125(d)(1) proceeding is the administrative

counterpart to the proceeding established by Congress in

§ 5125(d)(3) whereby a private party may bring an action

against a State in federal court seeking a declaratory

ruling on preemption. A § 5125(d)(1) proceeding is the

“type of proceeding[ ] from which the Framers would have

thought the States possessed immunity when they agreed

to enter the Union.” Federal Maritime Comm’n, 535 U.S.

at 756. As a result, state sovereign immunity bars USDOT

from adjudicating AWHMT’s claim that Tennessee’s

remedial action fee law is preempted.

The Sixth Circuit, however, reached the opposite

conclusion. The appeals court held that a § 5125(d)1)

proceeding is not “adjudication” because it differs from a

FMC proceeding in two ways the court considered signifi-

cant. “The first concerns the character of the decision-

maker. The second the nature of the decision.” 326 F3d at

735. App. at 14.

hs A ee a

The Sixth Circuit noted that the decision-maker in a

§ 5125(d)(1) proceeding is not an administrative law judge

(ALJ). The USDOT Secretary has delegated devision

making authority in § 5125(d)(1) proceedings to an Associ-

ate Administrator. App. at 96. According to the appeals

court, the Associate Administrator as “a member of the

executive branch charged with the duty of furthering the

purpose of the federal legislation at issue ... need not

Ph PL,

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rom

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remain ‘insulated from political influence.’” 326 F.3d at

735. App. at 14.

The critical test, however, is whether the administra-

tive adjudicator acts impartially and exercises “independ-

ent judgment” in reaching a decision. Federal Maritime

Comm’n, 535 U.S- at 756 (citation omitted). The Sixth

Circuit’s focus on the ALJ’s role in a FMC adjudication

ignores the fact that the final administrative decision-

maker is not the ALJ, but rather the members of the

Commission, who had, in fact, reversed the ALJ’s ruling

that case. See id. at 750, 759.

When the case was before the Fourth Circuit Court of

Appeals, it expressly recognized that although the FMC

members are political appointees within the Executive

Branch, in functioning as adjudicators, their actions are

“impartial.” South Carolina State Ports Authority v.

Federal Maritime Comm’n, 243 F.3d 165, 174 (4th Cir.

2001), aff’d, 535 U.S. 743 (2002). As stated by the appeals

court, the “commissioners in the FMC independently judge

the evidence before them.” 243 F.3d at 174.

USDOT’s Associate Administrator, as an agency

official, is in a similar position to the members of the FMC.

Neither USDOT nor any party in this matter has asserted

that the Associate Administrator does not exercise inde-

pendent judgment in reaching a preemption decision

under § 5125(d)(1).

If USDOT precluded the Associate Administrator from

exercising independent judgment, it would render the

entire process unconstitutional. The basic due process

requirement of an impartial tribunal “applies to adminis-

trative agencies which adjudicate as well as to courts.”

Witherow v. Larken, 421 U.S. 35, 46 (1975). A “biased

[eS ee a

decisionmaker [is] constitutionally unacceptable. ... ” Id.

at 47 (citations omitted).

There is, however, “a presumption of honesty and

integrity in those serving as adjudicators.... ” Id. And

that presumption controls here. Because USDOT’s Associ-

ate Administrator exercises independent judgment in

making a preemption determination, he serves as an

impartial decision-maker.

There is, moreover, nothing in § 5125(d)(1) that would

preclude the USDOT Secretary from delegating the

authority to render preemption decisions to an ALJ "

should he choose to do so. It strains credibility to suggest

that this change in delegation from a USDOT official to an

ALJ would transform a § 5125(d)(1) proceeding from one ~-

not barred by sovereign immunity to one that is. This

would be particularly ironic given that it is within the

USDOT Secretary's authority to determine who will rule

on preemption applications.

SBR ALN CORIO SABRE Te He ORS Yaa ES ek

Peseta a

In concluding that a § 5125(d)(1) proceeding is not

adjudication, the Sixth Circuit also found the “nature of

the final determination” significant. 326 F3d at 736. App.

at 14. The court noted that USDOT’s decision does not

provide for “injunctive relief” or “an award of monetary

damages” against the State. 326 F.3d at 736. App. at 14-

15.

eee ad

But “the type of relief sought is irrelevant to whether

Congress has the power to abrogate States’ immunity.”

Seminole Tribe of Florida v. Florida, 517 U.S. 44, 58

(1996). As stated by this Court in Federal Maritime

Comm'n, sovereign immunity would bar a private action

against a State even if in authorizing the action Congress

Boat ee

precluded the tribunal from awarding “any relief.” 535

U.S. at 766.

The “nature of the final determination” in a

§ 5125(d)(1) proceeding is declaratory. As discussed, supra,

it is the administrative counterpart to a judicial declara-

tory judgment. Here, AWHMT did in fact receive the relief

it sought, which was a declaratory determination by

USDOT, binding on Tennessee, that the State’s remedial

action fee is preempted and thus unconstitutional under

the Supremacy Clause. This is a fee that AWHMT’s mem-

bers did not want to pay. And since USDOT’s decision, the

State has not sought to collect the fee from transporters.

While the Sixth Circuit did not think a § 5125(d)\1)

proceeding was adjudication, it did conclude that “the

procedure fits within the informal rule-making process

outlined in the [APA].” 326 F.3d at 734 (citation omitted).

App. at 12. But a § 5125(d)(1) proceeding is not rulemak-

ing.

USDOT’s preemption determination cannot be accu-

rately characterized as a “rule” because it defines and

limits Tennessee’s remedial action fee by requiring that fee

to be apportioned. In the HMTA, Congress has expressly

denied USDOT authority to promulgate any “rule” that

would “define or limit the amount of a fee a State may

impose or collect.” 49 U.S.C. § 5119(c) (1997).

A § 5125(d)(1) proceeding does not, moreover, have the

hallmarks of an APA rulemaking. Two principle character-

istics distinguish adjudication from rulemaking:

First, adjudications resolve disputes among spe-

cific individuals in specific cases, whereas rule-

making affects the rights of broad classes of

unspecified individuals.... Second, because

eee

adjudications involve concrete disputes, they

have an immediate effect on specific individuals

(those involved in the dispute). Rulemaking, in

contrast, is prospective, and has a definitive ef-

fect on individuals only after the rule is applied.

Yesler Terrace Community Council v. Cisneros, 37 F.3d 442,

448 (9th Cir. 1994) (citations omitted).

: Applying these principles here confirms that a

§ 5125(d)(1) proceeding is adjudication, not rulemaking. In

response to AWHMT’s application, USDOT addressed a

concrete dispute - the preemption of Tennessee law —

between specific entities, AWHMT and the State. And

because USDOT’s decision is binding on the State as a

party to the proceeding, it has an immediate effect.®

A § 5125(d)(1) proceeding does fit cleanly within the

definition of “adjudication” in the APA, which is the

| “agency process for the formulation of an order.” 5 U.S.C.

7 § 551(7) (1996). An “order” is defined as “the whole or part

of a final disposition, whether affirmative, negative,

injunctive, or declaratory in form, of an agency in a

matter other than rule making but including licensing.” 5

U.S.C. §551(6) (1996) (emphasis supplied). USDOT’s

preemption decision is best viewed under the APA as an

“order” not a “rule” because it serves as a final disposition,

Pak

* Because a § 5125(d)(1) proceeding does not have the characteris-

tics of a rulemaking, USDOT’s preemption decision does not fit natu-

4 rally within the APA’s definition of a “tule,” which is “the whole or part

of an agency statement of general or particular applicability and future

effect designed to implement, interpret, or prescribe law or policy....”

5 U.S.C. § 551(4) (1996).

declaratory in form, of the proceeding commenced by a

third party’s filing of a preemption application.

The Sixth Circuit found a §5125(d)(1) proceeding

consistent with APA rulemaking because the agency

provides public notice and invites comment. 326 F.3d at

734-35. App. at 12-13. But the public notice and comment

that occurs in connection with rulemaking under the APA

is not the same as in a § 5125(d)(1) proceeding.

In rulemaking, the public has notice of and an oppor-

tunity to comment on the agency’s views regarding its

proposed rule. Under § 5125(d)(1), USDOT publishes a

summary of the applicant’s preemption application. 49

C.F.R. § 107.205(b) (2002). Thus, the public has notice of

and an opportunity to comment on the applicant’s views,

but not USDOT’s, about why the state law in issue is

preempted.

USDOT?’s view of preemption is first expressed when it

publishes its decision in the Federal Register. And at that

point only a party “aggrieved” by USDOT’s decision may

petition the agency to reconsider. 49 C.F.R. § 107.211

(2002).

The Sixth Circuit also found § 5125(d)(1) consistent

with rulemaking because under APA § 553(e) private

parties may petition an agency to promulgate a rule. 326

F.3d at 736. App. at 12. See 5 U.S.C. § 553(e) (1996). The

appeals court viewed this as comparable to an application

for a preemption determination under § 5125(d)(1). 326

F.3d at 736. App. at 12.

But a § 553(e) petition differs from a § 5125(d)(1)

application in at least three significant ways. First, a

§ 553(e) petition is not the only means by which an agency

may initiate rulemaking. A federal agency with the dele-

gated power to promulgate rules has the authority to

commence a rulemaking proceeding on its own initiative.

But USDOT has no authority to commence a § 5125(d)(1)

proceeding. This proceeding may only be commenced by a

third party filing a proper preemption application.

Second, APA § 553(e) does not require the petitioning

party to have standing, as does § 5125(d)(1).’ Third, an

agency is not required to initiate rulemaking upon receipt

of a § 553(e) petition. But under § 5125(d)(1), when US-

DOT receives a proper application, Congress has man-

dated that the agency “shall issue a decision.” 49 U.S.C.

§ 5125(d)(1) (1997) (emphasis supplied).

Finally, the Sixth Circuit found a § 5125(d)(1) proceed-

ing to be consistent with APA rulemaking because the

State “is in no way required to participate in the determi-

nation.... ” 326 F.3d at 735. App. at 13. The appeals

° Section 5125(d)(1) uses language associated with adjudication,

not rulemaking. Only a party “directly affected” by a State’s law may

file a preemption application. 49 U.S.C. § 5125(d)(1) (1997). In contrast,

any “interested” party may petition for a rule. 5 U.S.C. § 553(e) (1996).

In the same vein, an interested party may petition an agency to

reconsider its rule. See 326 F.3d at 736. App. at 16. But only an

“aggrieved” party may petition USDOT to reconsider its preemption

decision.

This congressional mandate further establishes that § 5125(d)(1)

was intended to be adjudicative. Cf. Federal Maritime Comm’n, 535

U.S. at 764 (the FMC does not “have the discretion to refuse to adjudi-

cate complaints brought by private parties”).

“ This conclusion ignores the fact that after receiving AWHMT’s

application USDOT “asked Tennessee to set forth in detail [in its

response comments] how much it collected [in remedial action fees] and

how it used the fees it collected in fiscal year 1996-97.” App. at 116.

La re

court held that even if the State chooses not to participate,

it is not barred from seeking judicial review of USDOT’s

decision. 736 F.3d at 735. App. at 13.

But there are both legal and practical reasons why a

State must actively participate in a § 5125(d)(1) proceed-

ing. As this Court reiterated in Federal Maritime Comm’n,

as a legal matter, if a State “fails to appear before the

[agency], it may not then argue the merits of its position in

an appeal of the [agency’s] determination... .” 535 U.S. at

762 (citation omitted).

The State also is prejudiced if it allows USDOT’s

preemption decision to become final without seeking

judicial review. In any subsequent action, the State’s

failure to pursue its administrative remedy precludes it

“from raising in court the merits of [its] claim or defenses

which could have been entertained administratively in the

first instance.”” Ulman v. United States, 558 F.2d 1 (Cl.

Ct. 1977).

There also are practical reasons why a State must

participate in a § 5125(d)(1) proceeding. A private party’s

decision to file an application asking USDOT to determine

that a State’s law is preempted produces “practical pres-

sures upon the State to respond and eventually to comply

” The Sixth Circuit also concluded that the State is not at risk for

a civil penalty assessment for non-compliance with USDOT’s preemp-

tion determination because “the agency is without authority to issue an

order against the state.” 326 F.3d at 736. App. at 15. But the appeals

court failed to take into consideration that USDOT’s preemption

decision falls within the definition of an “order” under the APA. And the

HMTA expressly authorizes USDOT to seek penalties for violation of

“an order issued under this chapter. .. . ” 49 U.S.C. § 5123(a)(1) (1997).

25 ‘

with a [USDOT] decision. ... [B]y complying, the State

will avoid the adverse political, practical, and symbolic

implications of being labeled a federal ‘lawbreaker.’”

Federal Maritime Comm’n, 535 U.S. at 783 (Breyer, J.,

dissenting).

These legal and practical considerations are exempli-

fied here. The State had no choice but to respond to

AWHMT’s application asking USDOT to determine that

Tennessee’s remedial action fee is preempted. The State

had to raise and preserve its merits arguments about why

the fee is not preempted. But once USDOT ruled in favor

of AWHMT, the State, even in the absence of an injunction,

ceased efforts to collect the fee from transporters while

pursing judicial review of the agency’s decision.

The Sixth Circuit’s ruling that state sovereign immu-

nity is inapplicable to a § 5125(d)(1) proceeding conflicts

with the rulings of this Court in Alden and Federal Mari-

time Comm’n. Congress clearly intended a § 5125(d)(1)

proceeding to be adjudicative, and USDOT’s preemption

decision to be binding on the State. Although a

§ 5125(d)(1) proceeding is informal rather than formal

adjudication under the APA, it bears all the essential

elements of an adjudicative proceeding. Congress exceeded

its Article I powers in subjecting the States to private

preemption claims under § 5125(d)(1). And as a result,

USDOT is barred from adjudicating AWHMT’s claim that

Tennessee’s remedial action fee is preempted.

eames

CONCLUSION

For the reasons stated, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

PAUL G. SUMMERS

Attorney General and Reporter

MICHAEL E. MOORE

Solicitor General

BARRY TURNER

Deputy Attorney General

Counsel of Record

425 Fifth Avenue North

Nashville, Tennesse: 37243

(615) 532-2586

App. 1

APPENDIX A

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

ELECTRONIC CITATION: 2003 FED

App. 0120P (6th Cir.)

File Name: 03a0120p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

State of Tennessee and Tennessee

Department of Environment and

Conservation,

Plaintiffs-Appellants,

United States Department of

Transportation, Research and Special

Programs Administration, and

Association of Waste Hazardous

Materials Transporters,

Defendants-Appellees.

No. 01-5373

Appeal from the United States District Court for the

Middle District of Tennessee at Nashville. No. 99-01126

— Todd J. Campbell, District Judge.

Argued: September 17, 2002

Decided and Filed: April 23, 2003

Before: SILER, DAUGHTREY, and GILMAN,

Circuit Judges.

a eee eae RTO See oat

App. 2

COUNSEL

ARGUED: Barry Turner, OFFICE OF THE ATTORNEY

GENERAL, Nashville, Tennessee, for Appellants. Michael

S. Raab, UNITED STATES DEPARTMENT OF JUSTICE,

Washington, D.C., for Appellees. ON BRIEF: Barry

Turner, OFFICE OF THE ATTORNEY GENERAL, Nash-

ville, Tennessee, for Appellants. Michael S. Raab, Mark B.

Stern, UNITED STATES DEPARTMENT OF JUSTICE,

Washington, D.C., Frazer C. Hilder, UNITED STATES

DEPARTMENT OF TRANSPORTATION, RESEARCH

AND SPECIAL PROGRAMS ADMINISTRATION, Wash-

ington, D.C., Peter J. Plocki, UNITED STATES DEPART-

MENT OF TRANSPORTATION, OFFICE OF THE

GENERAL COUNSEL, Washington, D.C., Grant C.

Glassford, James E. Gaylord, STOKES, BARTHOLOMEW,

EVANS & PETREE, Nashville, Tennessee, for Appellees.

Lawrence W. Bierlein, McCARTHY, SWEENEY &

HARKAWAY, Washington, D.C., for Amici Curiae.

OPINION

MARTHA CRAIG DAUGHTREY, Circuit Judge. In

this appeal, the State of Tennessee and the Tennessee

Department of Environment and Conservation challenge

the district court’s decision upholding the United States

Department of Transportation’s disallowance of an annual

fee imposed by Tennessee on interstate hazardous waste

transporters under the Tennessee Hazardous Waste

Management Act, Tenn.Code Ann. § 68-212-203(a)(6). The

district court held that the state statute authorizing the

fee is preempted by the federal Hazardous Materials

lt t‘“CSCOSCOC™SCSOOSCSCSCsSN

App. 3

Transportation Act, 49 U.S.C. §§ 5101 et seg. In response

to the claim that the federal agency’s action was barred by

sovereign immunity, the district court also held that the

determination by the United States Department of Trans-

portation (the USDOT) was an “executive administrative

action” that was not subject to either (1) the doctrine of

state sovereign immunity imbedded in [sic] Eleventh

Amendment, see Seminole Tribe of Florida v. Florida, 517

U.S. 44 (1996), or (2) that version of extra-constitutional

immunity doctrine lately recognized by the United States

Supreme Court in Alden v. Maine, 527 U.S. 706 (1999).

After judgment in the federal agency’s favor was entered

below, the Supreme Court announced its decision in

Federal Maritime Commission v. South Carolina State

Ports Authority, 535 U.S. 748, 122 S. Ct. 1864 (2002),

holding that the State of South Carolina was immune from

a complaint by a private party because the agency “adjudi-

cation” used to resolve the complaint administratively

“walked, talked, and squawked” like a lawsuit. Jd. at ras

122 S. Ct. at 1873. Hence, our task in this case is to

determine whether the agency determination made by the

USDOT meets the “walk, talk, and squawk test” of Federal

Maritime Commission. If so, the State of 'Tennessee would

be immune from the proceedings instituted in this case,

and the district court’s judgment would necessarily have to

be reversed.

For the reasons set out below, we conclude that

reversal in this case is not warranted, and we therefore

affirm the judgment of the district court.

App. 4

BACKGROUND

In 1975, Congress passed the Hazardous Materials

Transportation Act, 49 U.S.C. §§ 5101-5127, pursuant to

the Commerce Clause in Article I of the United States

Constitution. The stated intent of the Act is “to provide

adequate protection against the risk to life and property

inherent in the transportation of hazardous material in

commerce by improving the regulatory and enforcement

authority of the Secretary of Transportation.” 49 U.S.C.

§ 5101. In an effort to create a coherent approach to

addressing the problems posed by the interstate transpor-

tation of hazardous material (known in the trade as

“hazmat”), Congress vested central authority over

“hazmat” regulation in the USDOT. Consistent with this

centralization of authority, Congress determined that

federal preemption of state and local laws inconsistent

with the Act was necessary and, therefore, promulgated a

section of the Act entirely devoted to preemption concerns.

Section 5125(a) sets out the criteria for preemption:

(a) General. Except as provided in subsections

(b), (c), and (e) of this section and unless author-

ized by another law of the United States, a re-

quirement of a State, political subdivision of a

State, or Indian tribe is preempted if —

(1) complying with a requirement

of the State, political subdivision, or

tribe and a requirement of this chapter,

a regulation prescribed under this

chapter, or a hazardous materials

transportation security regulation or

directive issued by the Secretary of

Homeland Security is not possible; or

App. 5

(2) the requirement of the State,

political subdivision, or tribe as applied

or enforced, is an obstacle to accom-

plishing and carrying out this chapter,

or a regulation prescribed under this

chapter, or a hazardous materials

transportation security regulation or

directive issued by the Secretary of

Homeland Security.

49 U.S.C. § 5125(a)." Ob viously, not all state requirements

are preempted, and the procedure for determining

whether preemption will apply to a particular state

provision is found in subsection (d):

(dX1) A person (including a State, a political

subdivision of a State or Indian tribe) directly af-

fected by a requirement of a State, political sub-

division, or tribe may apply to the Secretary, as

provided by regulations prescribed by the Secre-

tary, for a decision on whether the requirement is

preempted by subsection (a),(b)(1), or (c) of this

section. The Secretary shall publish notice of the

application in tho Federal Register. The Secre-

tary shall issue a decision on an application for a

determination within 180 days after the date of

the publication of the notice of having received

such application, or the Secretary shall publish a

statement in the Federal Register of the reason

why the Secretary’s decision on the application is

delayed, along with an estimate of the additional

' This opinion quotes the statute as it currently reads. Although it

was amended on November 25, 2002, Pub. L. 107-296, as part of the

Homeland Security Act of 2002, the changes do not affect the substan-

tive analysis in this case.

App. 6

time necessary before the decision is made. After

notice is published, an applicant may not seek

judicial relief on the same or substantially the

same issue until the Secretary takes final action

on the application or until 180 days after the ap-

plication is filed, whichever occurs first.

(2) After consulting with States, political subdi-

visions of States, and Indian tribes, the Secretary

shall prescribe regulations for carrying out para-

graph (1) of this subsection.

(3) Subsection (a) of this section does not pre-

vent a State, political subdivision of a State, or

Indian tribe, or another person directly affected

by a requirement, from seeking a decision on

preemption from a court of competent jurisdic-

tion instead of applying to the Secretary under

paragraph (1) of this subsection.

49 U.S.C. §5125(d). The party seeking such a decision

“may bring a civil action in an appropriate district court of

the United States for judicial review of the decision of the

Secretary” under § 5125(f).

When the subject of the preemption decision is the

validity of a fee imposed by the state on “hazmat” trans-

porters, as was the case here, § 5125(g) sets out the

following test:

A State, political subdivision of a State, or Indian ]

tribe may impose a fee related to transporting

hazardous material only if the fee is fair and

used for a purpose related to transporting haz-

ardous material, including enforcement and

planning, developing, and maintaining a capabil-

ity for emergency response.

49 U.S.C. § 5125(g). :

4 -~

App. 7

The implementing regulations of § 5125 provide that

those who seek a preemption determination concerning a

state “hazmat” requirement may apply to the Associate

Administrator of the USDOT’s Research and Special

Programs Administration. See 49 C.FR. § 107.203(a) and

(b). The applicant must also serve a copy of the application

on the state, notifying state officials of their right to

submit comments regarding the application to the Associ-

ate Administrator. See 49 C.F.R. § 107.205(a). In addition,

the Associate Administrator is required to publish notice of

the application in the Federal Register, inviting comments.

See 49 C.F.R. § 107.205(b). All parties submitting com-

ments are required to provide those comments to’ the

applicant as well, providing notice of service to the Associ-

ate Administrator. See 49 C.F.R. § 107.205(c). After receiv-

ing comments, the Associate Administrator is free to

conduct an investigation and may or may not convene a

hearing. See 49 C.F.R. § 107.207. Upon reaching a deter-

mination, the Administrator issues a written statement

setting out relevant facts and law to all involved parties.

The determination is subject to reconsideration upon the

motion of a party. Thereafter it is placed on file in the

public docket, printed in the Federal Register, and consid-

ered a final agency determination on the disputed question

of preemption. See 49 C.F.R. § 107.209. Within 60 days of

publication, the parties are free to seek judicial review of

the determination in a federal district court. See 49 U.S.C.

§ 5125(f); 49 C.FR. § 107.213.

In this case, the Association of Waste Hazardous

Materials Transporters filed an application with the

Associate Administrator in March 1998, seeking a preemp-

tion determination pursuant to § 5125(d). The Association

App. 8

challenged the validity of TENN. CODE ANN. § 68-212-

203(a)(6), a provision of the Tennessee Hazardous Waste

Management Act that levies a flat $650 annual fee on all

persons issued hazardous waste transportation permits by

the state. The Association’s application was served upon

both state officials and the USDOT Administrator and

printed in the Federal Register, giving interested parties

notice and an invitation to submit comments. See 63 Fed.

Reg. 17479 (April 9, 1998). After the submission of com-

ments by the state and rebuttal comments by the Associa-

tion, the Associate Administrator issued a decision in favor

of the Association, concluding that the state law provision

was preempted by federal law. See 64 Fed. Reg. 54474

(Oct. 6, 1999). In reaching the decision, the Administrator

concluded that the fee met neither of the requirements of

§ 5125(g), finding that it was not fair and was not used for

purposes consistent with the mandate of the federal Act.

As a result, the state filed a petition in federal district

court seeking judicial review of the preemption determina-

tion. Relying on our holding in Tennessee Department of

Human Services v. United States Department of Educa-

tion, 979 F.2d 1162 (6th Cir. 1992), the district court held

that Tennessee was not protected from purely administra-

tive action by principles of sovereign immunity. The state

now appeals that determination under the collateral order

doctrine. See Puerto Rico Aqueduct and Sewer Auth. v.

Metcalf & Eddy, Inc., 506 U.S. 139 (1993).

ANALYSIS

Dual sovereignty, of course, lies at the center of the

American constitutional structure. In ratifying the federal

Constitution, the states surrendered a portion of their

ay ce cla is

App. 9

inherent immunity and consented to suits brought both by

sister states and by the federal government. See Alden,

527 U.S. at 755. However, the states, as political sover-

eigns, remained immune to private suit, provided that

they had not given prior consent or otherwise waived

immunity. See, e.g., Port Auth. Trans-Hudson Corp. v.

Feeney, 495 U.S. 299, 304 (1990). Immunity to private suit

is not limitless; through later ratification of the Four-

teenth Amendment, the states waived immunity to suits

brought pursuant to the congressional enforcement power

granted by Section Five of that Amendment. See Dellmuth

v. Muth, 491 U.S. 223, 227-28 (1989) (explaining that

Congress has the authority to abrogate state sovereign

immunity under Section Five of the Fourteenth Amend-

ment when the intent to abrogate is clearly stated in the

congressional act).

Passed in reaction to the Supreme Court decision in

Chisholm v. Georgia, 2 U.S. (2 Dall.) 419 (1793), the

Eleventh Amendment of the United States Constitution

provides that “[t]he Judicial power of the United States

shall not be construed to extend to any suit in law oi

equity, commenced or prosecuted against one of the United

States by Citizens of another State, or by Citizens or

Subjects of any Foreign State.” U.S. Const. amend. XI.

Until recently, the Eleventh Amendment was considered

the primary source of state sovereignty, popularizing the

shorthand term “11th Amendment sovereign immunity” as

a general reference to inherent state power. However,

recent Supreme Court analysis has provided that “the

sovereign immunity of the States neither derives from nor

is limited by the terms of the Eleventh Amendment.”

Alden, 527 U.S. at 712; see also Fed. Mar. Comm’n, 535

U.S. at __, 122 S. Ct. at 1871 (stating “the Eleventh

App. 10

Amendment does not define the scope of the States’ sover-

eign immunity; it is but one particular exemplification of

that immunity”). Based upon interpretations of this

inherent power, the Supreme Court has held that states

are immune to private suits for violation of federal laws

enacted under Congress’s Article I powers not only in

Article III courts, but also in state courts. See Seminole

Tribe, 517 U.S. at 47 (immunity in federal courts); Alden,

527 U.S. at 712 (immunity in state courts). In addition,

states may not be subjected to binding administrative

adjudications brought by private parties unless prior

consent to such proceedings has been given. See Fed. Mar.

Comm’n, 535 U.S. at ___, 122 S. Ct. at 1874.

The central question in this case thus becomes

whether the process of preemption determination estab-

lished by Congress and carried out by the USDOT falls

within the ambit of adjudicatory determinations barred by

state sovereign immunity, as delineated in Federal Mari-

time Commission. There, the Court held that sovereign

immunity protected a state agency from suit by a private

party seeking injunctive relief and monetary damages for

violation of the Shipping Act of 1984, 46 U.S.C. App.

§ 1710(a), which is enforced by the Federal Maritime

Commission. 535 U.S. at __, 122 S. Ct. at 1874. In the

event of a complaint, the Shipping Act utilizes an adminis-

trative proceeding before an administrative law judge,

governed by the Commission’s Rules of Practice and

Procedure, which the Court characterized as “quite similar

to those found in the Federal Rules of Civil Procedure.” Id.

at ___, 122 S. Ct. at 1873. After cataloging the procedures

provided by the Commission’s rules, describing the role of

the administrative law judge, and analyzing the nature of

the available remedies, the Court concluded that “the

App. 11

similarities between F{ederal] M[aritime] C[ommission]

proceedings and civil litigation are overwhelming.” Id. at

__, 122 S. Ct. at 1874. The Court reiterated the lower

court’s characterization of the Commission’s administra-

tive proceeding as one that “walks, talks, and squawks

very much like a lawsuit” and concluded that, like Article

III actions, the proceedings were adjudicative in nature

and were therefore barred by sovereign immunity in

actions against the state. Id. at ___, 122 S. Ct. at 1873-

1877.

Hence, Federal Maritime Commission makes it clear

that the district court’s analysis in this case, which re-

jected Tennessee’s claim of sovereign immunity merely on

the basis that the USDOT proceeding was administrative

in nature, is no longer complete. See Tenn. v. U.S. Dep’t of

Transp., Order No. 3:99-1126 (M.D. Tenn. Feb. 27, 2001)

(relying on Tenn. Dep’t of Human Servs. v. U.S. Dep’t of

Educ., 979 F.2d 1162 (6th Cir. 1992), in determining that

“Eleventh Amendment immunity does not apply to Federal

executive administrative action”). It falls to us to deter-

mine, based on the record developed below, whether the

nature of the procedure used by the USDOT to respond to

requests for preemption determinations under the Haz-

ardous Matenals Transportation Act is sufficiently “adju-

dicative” to fall under the rubric of the majority opinion in

Federal Maritime Commission. In doing so, we must be

mindful that it is also the duty and prerogative of admin-

istrative agencies in the executive branch of our constitu-

tionally tripartite form of government to enforce federal

law and to enact regulations necessary to that enforce-

ment. See, e.g., Chevron, U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837 (1984).

App. 12

We conclude that the facts in the record clearly distin-

guish this case from Federal Maritime Commission be-

cause the process used by the USDOT simply is not an

“adjudication,” as that term was used by the majority in

the Supreme Court decision.

The structure of the preemption determination proc-

ess detailed in 49 U.S.C. § 5125 is unique; the parties and

the district court in this case were unable to identify any

other congressional act employing a similar method. The

process appears to be designed to meet two distinct goals:

first, to allow the USDOT to interpret provisions of state

law in conjunction with its understanding of the purpose

of the federal legislation that it administers and, second,

to ensure that its determination is afforded the deference

required by Chevron when reviewed by the courts. As a

result, the Act mandates a procedure that approximates

other administrative procedures already given judicial .

approval.

Although unique in its structure, the procedure fits

within the informal rule-making process outlined in the

Administrative Procedure Act. See 5 U.S.C. § 553. The APA

provides for interested parties to “petition for the issuance,

amendment, or repeal of a rule.” 5 U.S.C. § 553(e); see 49

C.FR. § 106.10 (stating that the regulations are added,

amended, or deleted pursuant to the informal rule-making

procedures of the APA). Accordingly, preemption determi-

nations are prompted by the application of “[a] person ...

directly affected” by the requirements of the state law in

question, in this matter the Association of Waste Hazard-

ous Materials Association. 49 U.S.C. § 5125(d). The US-

DOT Associate Administrator then publishes notice of the

application in the federal register, inviting “interested

App. 13

persons an opportunity to participate ... through submis-

sion of written data, views, or arguments with or without

opportunity for oral presentation.” 5 U.S.C. § 553(c); see 49

C.F.R. § 106.55; 49 C.FR. § 107.205. The state is also

mandatorily provided notice by the party seeking a ruling

before any determination is reached by the Administrator.

See 49 C.F.R. § 107.205; see also 63 Fed. Reg. 17,479 (Apr.

9, 1998) (public notice and invitation to comment in this

case). Further, although the state is in no way required to

participate in the determination, state officials are en-

couraged to submit comments that better help the admin-

istrator evaluate the position of the relevant state agency.

Even if the state chooses not to participate, it is not barred

from challenging the final determination in a federal

district court. See 49 U.S.C. § 5125(f). As earlier noted,

similar versions of this process of rule-making have gained

approval by the courts because of the provision for notice

and comment by interested parties, as well as the applica-

tion of agency expertise in reaching a final outcome. See

generally Chevron, 467 U.S. at 837.

This process differs dramatically from the one scruti-

nized by the Supreme Court in Federal Maritime Commis-

sion and, quite plainly, does not mirror federal civil

litigation. There are no formal rules of practice or proce-

dure, no formal complaint is required, there is no provision

for an answer by the state, and there is no formal discov-

ery process. An investigation, if initiated by the Associate

Administrator, is not governed by formal discovery rules.

The Administrator is not required to conduct a hearing,

and if a hearing is conducted, it is not bound by the rules

of evidence or civil procedure, nor is it handled by an

administrative law judge. See 49 C.FR. §§ 107.205-209.

The resulting ruling is prospective only.

App. 14

We find two of the points set out above dispositive.

The first concerns the character of the decision-maker. The

second concerns the nature of the decision.

In invalidating the administrative action in Federal

Maritime Commission, the Supreme Court focused heavily

upon the role of the administrative law judge, finding that

an administrative law judge acts as the functional equiva-

lent of an Article III judge. See 535 U.S. at ___, 122 S. Ct.

at 1872-73. The Court noted that administrative law

judges have absolute immunity from liability for their

judicial acts and are triers of fact “insulated from political

influence.” Id. at ___, 122 S. Ct. at 1872 (relying on Buiz v.

Economou, 438 U.S. 478 (1978)). In contrast, the decision-

maker in this action, the Associate Administrator for

Hazardous Materials Safety, acting under authority

delegated by the Secretary of Transportation, is a member

of the executive branch charged with the duty of further-

ing the purpose of the federal legislation at issue. This

official is not bound by rules of evidence or procedure and

need not remain “insulated from political influence.”

Clearly, the Associate Administrator acts not as an Article

III judge, virtually or functionally, but merely, as the title

implies, as an administrator of a federal agency interpret-

ing and enforcing federal legislation in reaching the

preemption determination.

The other dispositive factor is one that clearly distin-

guishes the process used by the USDOT in making the

preemption determination from the procedure used in

Federal Maritime Commission: the nature of the final

determination. Rather than an adjudication of the rights

and responsibilities of different parties leading to injunc-

tive relief and an award of monetary damages, the pre-

emption decision in 49 U.S.C. § 5125 does not direct the

App. 15

entry of relief against the State of Tennessee. Instead, it

serves as an administrative interpretation of a federal

statute, prospective only in its application and warranting

Chevron deference in subsequent litigation. See Chevron,

467 U.S. at 834-44. The action of the Associate Adminis-

trator does not result in an order of enforcement against a

state, nor does it leave a state defenseless in later litiga-

tion if the state chooses not to participate in the adminis-

trative proceeding. See Fed. Mar. Comm’n, 535 U.S. at ae

122 S. Ct. at 1876 (explaining that procedures effectively

coercing states into participating in Federal Maritime

Commission proceedings influenced the Court’s decision

that sovereign immunity barred suit against the State of

South Carolina). Further, in contrast to the powers of the

Federal Maritime Commission under provisions of the

Shipping Act, see id. at __, 122 S. Ct. at 1877-78, the

USDOT Administrator does not possess the power to

assess a civil penalty for non-compliance because the

agency is without authority to issue an order against the

state. Instead, the Administrator is merely providing an

agency interpretation of the federal law in question, and

that interpretation is strictly prospective in nature.

One further point about the preemption procedures

must be addressed. The procedures include an opportunity

for a person aggrieved by a determination to file a petition

for reconsideration with the Associate Administrator. See

49 C.F.R. § 107.211. The State of Tennessee argues that

the petition for reconsideration functions as the equivalent

of a legal appeal, differentiating this procedure from the

standard rule-making process. We conclude, however, that

the existence of an opportunity to petition for reconsidera-

tion does not alter the nature of the decision reached by

App. 16

the USDOT. Indeed, administrative agencies often enter-

tain petitions for reconsideration in connection with the

rule-making proceedings. See, e.g., Simms v. Nat'l High-

way Traffic Safety Admin., 45 F.3d 999, 1003 (6th Cir.

1995); Chrysler Corp. v. Dep’t. of Transp., 472 F.2d 659,

680 (6th Cir. 1972).

CONCLUSION

For the reasons set out above, we conclude that the

administrative procedure addressed in this matter falls

within the rule-making process lying at the center of the

responsibilities of federal executive agencies. Rather than

an adjudicative procedure, the process utilized to reach a

preemption determination serves the valuable function of

allowing an agency of the executive branch to interpret

federal legislation that it is authorized to enforce. This

procedure, employing a notice-and-comment process and

the expertise of the USDOT, does not offend the dignity of

the states, nor does it force a state to adjudicate claims

brought by private citizens against the state as if it were

sued in an Article III tribunal. We hold that it is, instead,

an appropriate — and constitutionally valid — method

designed to permit enforcement of federal legislation

implementing the Commerce Clause of the United States

Constitution. We therefore AFFIRM the judgment of the

district court and REMAND the case for further proceed-

ings.

App. 17

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

No. 01-5373

STATE OF TENNESSEE and TENNESSEE

DEPARTMENT OF ENVIRONMENT AND

CONSERVATION,

Plaintiffs-Appellants,

UNITED STATES DEPARTMENT OF

TRANSPORTATION, RESEARCH AND SPECIAL

PROGRAMS ADMINISTRATION and ASSOCIATION OF

WASTE HAZARDOUS MATERIALS TRANSPORTERS,

Defendants-Appellees.

Before: SILER, DAUGHTREY, and GILMAN , Circuit

Judges.

JUDGMENT

(Filed Apr. 23, 2003)

On Appeal from the United States District Court

for the Middle District of Tennessee at Nashville.

THIS CAUSE was heard-on the record from the

district court and was argued by counsel.

IN CONSIDERATION WHEREOF, it is ORDERED

that the judgment of the district court is AFFIRMED and

the case is REMANDED for further proceedings consistent

with the opinion of this court.

ENTERED BY ORDER

OF THE COURT

/s/ Leonard Green

Leonard Green, Clerk

App. 18

APPENDIX B

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF TENNESSEE

NASHVILLE DIVISION

STATE OF TENNESSEE )

and TENNESSEE DEPT. )

OF ENVIRONMENT and )

CONSERVATION NO. 3:99-1126

‘ JUDGE CAMPBELL

)

U.S. DEPT. OF )

TRANSPORTATION, ?

RESEARCH & SPECIAL ?

PROGRAMS )

ADMINISTRATION and ?

ASSOCIATION of )

WASTE HAZARDOUS?

MATERIALS )

TRANSPORTERS

ORDER

Pending before the Court are the Magistrate Judge’s

Report and Recommendation (Docket No. 36) and Defen-

dants’ Objections and Motions for De Novo Determination

(Docket Nos. 37 and 41) and the parties’ Motions for

Judgment on the Administrative Record (Docket Nos. 17,

21, and 24). The Court heard oral argument on February

23, 2001. For the reasons described herein, the Report and

Recommendation is REJECTED and the case is referred

back to the Magistrate Judge for a Report and Recommen-

dation on the Motions for Judgment on the Administrative

Record.

App. 19

Plaintiffs, the State of Tennessee and the Tennessee

Department of Environment and Conservation (“Tennes-

see”), filed this action asking the Court to overturn the

United States Department of Transportation’s (“DOT”)

determination that the Hazardous Materials Transporta-

tion Act (“HMTA”), 49 U.S.C. §§ 5101-5127, preempts

Tennessee’s remedial action fee imposed on hazardous

waste transporters. The Report and Recommendation sets

out the facts and the pertinent history of HMTA, and it

need not be repeated here. The Report and Recommenda-

tion finds that DOT’s preemption determination was

barred by Tennessee’s sovereign immunity and, therefore,

recommends that DOT’s decision be vacated, and that the

action be dismissed.

Pursuant to Rule 72(a) of the Federal Rules of Civil

Procedure and Rule 303(g) of the Local Rules for Magis-

trate Proceedings, the Court may reverse or modify the

ruling of the Magistrate Judge only if it is clearly errone-

ous or contrary to law.

Defendants argue that the Report and Recommenda-

tion erred in holding that Tennessee’s sovereign immunity

precludes DOT from determining that HMTA preempts

Tennessee’s remedial action fee. Defendants also argue

that the Report and Recommendation applied an incorrect

standard for determining the scope of state sovereign

immunity. According to Defendants, DOT's preemption

procedure does not infringe on the state’s dignity in any

manner similar to a lawsuit. Finally, the Defendants

object to the Report and Recommendation on the ground

that it improperly rejects application of controlling Sixth

Circuit precedent, to-wit Tennessee Department of Human

Services v. U.S. Dept. of Education, 979 F.2d 1162 (6th Cir.

1992).

App. 20

Tennessee urges the Court to adopt the Report and

Recommendation because Congress does not have the

power under article I of the United States Constitution to

abrogate Tennessee’s sovereign immunity and subject the

State to a binding adjudication before a Federal agency in

an action commenced by a private party. According to the

State of Tennessee, Tennessee’s sovereign immunity is

neither derived from nor limited by the Eleventh Amend-

ment, and its sovereign immunity applies to Federal

agency adjudication. More specifically, Tennessee claims

that sovereign immunity bars adjudication by DOT of the

claim that Tennessee’s fee law is preempted. In addition,

Tennessee argues that the Report and Recommendation

properly applied the sovereign immunity principles articu-

lated in recent Supreme Court cases to DOT’s adjudication

of the preemption claim. Tennessee particularly relies on

Alden v. Main, 119 S.Ct. 2240 (1999) and Seminole Tribe

of Florida v. Florida, 116 S.Ct. 1114 (1996). Finally,

Tennessee argues that Tennessee Dept. of Human Services

is not controlling precedent because it deals with Eleventh

Amendment immunity and not sovereign immunity.

In Tennessee Dept. of Human Services, the Sixth

Circuit held that Eleventh Amendment immunity did not

bar Article I executive agency action in the form of an

arbitration panel under the Randolph-Sheppard Act. 979

F.2d at 1166-1169. However, the Court did find that

Eleventh Amendment immunity was applicable to a

subsequent suit by an individual in Federal Court to

enforce the arbitration panel’s monetary award. Finally,

the Sixth Circuit held that the statute did not contain a

clear statement of Congress’ intention to abrogate the

state’s Eleventh Amendment immunity and, therefore, the

Court concluded that Eleventh Amendment immunity

| | | |

App. 21

barred the individual’s suit in Federal Court to enforce the

arbitration panel’s award. Id.

In Alden, the Supreme Court held that states, under

the United Sates Constitution, have sovereign immunity

that is broader than the Eleventh Amendment. 119 S.Ct.

at 2240. Nevertheless, Alden does not hold that state

sovereign immunity applies to Federal executive adminis-

trative action. Moreover, nothing in Alden or Seminole

Tribe, 116 S.Ct. at 1114, undermines the fundamental

holding of Tennessee Dept. of Human Services that Elev-

enth Amendment immunity does not apply to Federal

executive administrative action.

No Supreme Court opinion has ever applied state

sovereign immunity to Federal executive administrative

action. No United States Circuit Court has ever applied

state sovereign immunity to Federal executive administra-

tive action.

Based on the foregoing, the Court finds that Tennessee

Dept. of Human Services, read in the context of the current

Supreme Court Eleventh Amendment and sovereign

immunity decisions, requires this Court to reject the

Report and Recommendation. Under controlling Sixth

Circuit precedent, Eleventh Amendment immunity does

not apply to Federal executive administrative action.

Neither the Supreme Court nor any Circuit Court has ever

extended state sovereign immunity to Federal executive

administrative action. Therefore, the Magistrate Judge’s

conclusion in the Report and Recommendation that

TDOT’s preemption determination was barred by Tennes-

see’s sovereign immunity was contrary to law.

Having rejected the Report and Recommendation, the

Motions for Judgment on the Administrative Record

i ef

App. 22

(Docket Nos. 17, 21, and 24) are REFERRED to the

Magistrate Judge for a further Report and Recommenda-

tion.

IT IS SO ORDERED.

/s/ Todd J. Campbell

TODD J. CAMPBELL

UNITED STATES

DISTRICT JUDGE

App. 23

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF TENNESSEE

NASHVILLE DIVISION

STATE OF TENNESSEE, )

et al )

sat )

ie aaenae ) CASE NO. 3:99-1126

™ ) JUDGE

U. S. DEPARTMENT ) CAMPBELL/KNOWLES

OF TRANSPORTATION, ?

et al.,

Respondents. )

REPORT AND RECOMMENDATION

I. Introduction and Background

By an Order entered July 17, 2000, (Docket Entry No.

30), the parties’ cross-motions for judgment on the admin-

istrative record were referred to the undersigned for

Report and Recommendation pursuant to 28 U.S.C.

§ 636(b)(1)(B). Oral argument was held August 17, 2000.

For the reasons discussed below, the undersigned recom-

mends that Petitioners’ motion be granted in part, that

Respondents’ motion be denied, that the decision of the

Secretary of Transportation be vacated, and that this

action be dismissed.

At bottom, this case involves a much simpler issue

than the one the Court must address. That simple issue is

whether a state statute and rule requiring those who

transport hazard waste to or from locations in the State of

Tennessee to pay an annual $650.00 remedial action fee

are preempted by federal law, namely the Hazardous

a MMe eS ay

App. 24

Materials Transportation Act, 49 U.S.C. §§ 5101-5107. But

because the Act creates an unusual administrative proce-

dure, which the State claims violates its sovereign immu-

nity, that issue must be addressed. That issue can best be

understood after a discussion of the Act and the unusual

procedure it establishes.

The Act was initially passed by Congress in 1975 “to

replace a patchwork of state and federal laws and regula-

tions concerning hazardous materials transport with a

scheme of uniform, national regulations.” Southern Pac.

Transp. Co. v. Public Ser. Comm’n, 909 F.2d 352, 353 (9th

Cir. 1990). The Act is intended “to provide adequate

protection against the risks of life and property which are

inherent in the transportation of hazardous materials in

commerce by improving the regulatory and enforcement

authority of the Secretary of Transportation.” 49 U.S.C.

§ 5101. There is no question that Congress acted under the

Commerce Clause of the Constitution, Art. I, Sec. 8, cl.3, in

passing the Act.

According to the Act’s legislative history, the main

purpose of the original legislation was “to broaden federal

regulatory control over interstate and foreign shipments of

hazardous materials by rail and other transportation

modes.” H.R. Rep. No. 1083, 93d Cong., 2d Sess. (1974),

reprinted in 1974 U.S.C.C.A.N. 7669. Congress vested

primary authority over regulation of the transportation of

hazardous materials in the Department of Transportation,

so that a comprehensive approach to the minimization of

risks associated with moving dangerous materials would

be developed. See S. Rep. No. 1192, 93 Cong., 2d Sess 2

(1974). The Senate Committee noted in its report on the

proposed legislation that “[a] prime difficulty discussed by

most all of the witnesses ... is that the fragmentation of

App. 25

regulatory power among the agencies dealing with the

different modes of transportation blocks a coherent ap-

proach to the problem.” Jd. at 8.

In view of these concerns, it is not surprising that

Congress determined the Act should preempt state and

local laws inconsistent with its provisions. The Senate

Committee explained the federal preemption was neces-

sary “to preclude a multiplicity of state and local regula-

tions and the potential for varying as well as conflicting

regulations in the area of hazardous materials transporta-

tion.” Id. at 37. Thus, the Act contains a lengthy section

entitled “Preemption.” See 49 U.S.C. § 5125.

Relevant provisions of § 5125 are quoted in the foot-

note,’ and can be summarized as follows. Section 5125(a)

* The Act provides in pertinent part as follows:

(a) General. Except as provided in subsections (b), (c), and

(e) of this section and unless authorized by another law of

the United States, a requirement of a State, political subdi-

vision of a State, or Indian Tribe is pre-empted, if —

(1) complying with a requirement of the State,

political subdivision, or tribe and a requirement

of this chapter or a regulation prescribed under

this chapter is not possible; or

(2) the requirement of the State, political sub-

division, or tribe as applied or enforced, is an ob-

stacle to accomplishing and carrying out this

chapter or a regulation prescribed under this

chapter.

(d) Decisions on Preemption. (1) A person (including a

State, political subdivision of a State, or Indian Tribe) di-

rectly affected by the requirement of a State, political sub-

division, or tribe may apply to the Secretary, as provided by

regulations prescribed by the Secretary, for a decision on

(Continued on following page)

App. 26

provides for the preemption of any requirement of a state,

if that requirement, as applied or enforced, is an obstacle

to accomplishing and carrying out the Act. Subsection (g)

allows a state to impose a fee related to transporting

hazardous material “only if’ two conditions are met: (1)

the fee must be fair and (2) the fee must be used for a

purpose related to transporting hazardous material,

whether the requirement is pre-empted by subsection

(a)(b)(1), or (c) of this section. The Secretary shall publish

notice of the application in the Federal Register. The Secre-

tary shall issue a decision on an application for as [sic] de-

termination within 180 days after the date of the

publication of the notice of having received such application,

or the Secretary shall publish a statement in the Register of

the reason why the Secretary’s decision on the application is

delayed, along with an estimate of the additional time nec-

essary before the decision is made. After notice is published,

an applicant may not seek judicial relief on the same or sub-

stantially the same issue until the Secretary takes final ac-

tion on the application or until 180 days after the

application is filed, whichever occurs first.

(2) After consulting with States, political subdivisions

of States, and Indian Tribes, the Secretary shall prescribe

regulations for carrying out paragraph (1) of this subsection.

(3) Subsection (a) of this section does not prevent a

State, political subdivision of the State, or Indian Tribe, or

another person directly affected by a requirement, from

seeking a decision on preemption from a court of competent

jurisdiction instead of applying to the Secretary under

paragraph (1) of this subsection. ;

(f) Judicial Review. A party to a proceeding under

subsection (d) or (e) of this section may bring a civil action

in an appropriate district court of the United States for ju-

dicial review of a decision of the Secretary not later than 60

days after the decision becomes final. 49 U.S.C. § 5125.

App. 27

including enforcement and planning, developing, and

maintaining a capability for emergency response.

As mentioned above, the Act contains an unusual

administrative procedure regarding preemption determi-

nations. See § 5125(d),(f). Subsection (d) allows a person

affected by a requirement of the State to seek a determi-

nation from the Secretary of Transportation as to whether

that requirement is preempted by the Act. If such an

application is made, the Secretary must publish notice of

the application in the Federal Register. He must then

issue a “determination” as to whether the State’s require-

ment is preempted, within 180 days after the notice is

published. Subsection (f) provides for judicial review of the

decision of the Secretary made in a proceeding under

subsection (d) by an appropriate district court of the

United States.

Federal regulations enacted to implement § 5125

provide that a person affected by a requirement of a state

may apply to the Associate Administrator for Hazardous

Material Safety, Research and Special Programs for a

preemption determination. 49 CFR § 107.203(a) and (b).

The regulations also provide in part as follows:

The Associate Administrator may initiate an in-

vestigation of any statement in an application

and utilize in his or her evaluation any relevant

facts obtained by that investigation. The Associate

Administrator may solicit and accept submissions

from third persons relevant to an application and

will provide the applicant an opportunity to re-

spond to all third person submissions. In evalu-

ating an application, the Associate Administrator

may consider any other source of information.

The Associate Administrator on his or her own

na:

App. 28

initiative may convene a hearing or conference, if

he or she considers that a hearing or conference

will advance his or her evaluation of the applica-

tion.

49 CFR §-107.207(a).

Once the preemption determination is made, it “con-

stitutes an administrative determination as to whether a

particular requirement of a state... is preempted under

the federal hazardous material transportation law or

regulations issued thereunder.” 49 CFR § 107.209(d). The

Associate Administrator's determination becomes “final”

when it is published in the Federal Register. 49 CFR

§ 107.213. A “party” to a preemption proceeding may seek

review in U.S. District Court of a decision of the Associate

Administrator by filing a petition with the Court within

sixty days after the determination becomes final. Id.

At oral argument, counsel for the parties advised the

Court that they were unaware of any other federal statute

that creates such a proceeding, and the Court has found

none.

The State of Tennessee has enacted what is indis-

putably “a fee related to transporting hazardous material.”

T.C.A § 68-212-203(a)(6) imposes a flat, annual $650 per

company charge on transporters of hazardous waste.

On March 23, 1998, the Association Of Waste Hazard-

ous Materials Transporters (the “Association”) filed an

application with the Secretary for a preemption determi-

nation, pursuant to § 5125(d). Per the appropriate statu-

tory procedure, the Association’s application was

published in the Federal Register and interested parties

were invited to submit comments. 63 Fed. Reg. 17479

(April 9, 1998) (A.R. at 121-25). After submission of

poem ses

App. 29

comments and rebuttal comments, the Associate Adminis-

trator issued his decision on October 6, 1999, in which he

concluded that the fee was preempted by federal law. 64

Fed. Reg. 54474 (A.R. at 189-96). The Associate Adminis-

trator determined that the fee did not satisfy either

requirement of § 5125(g) — the fee was not fair, and it was

not used for purposes relating to transporting hazardous

material.

On December 3, 1000 [sic], the State filed a petition

with this Court for judicial review of the preemption

determination, pursuant to § 5125(f).

II. Discussion

A. Summary of Arguments

The State argues that the procedures set forth in

§ 5125(d) impinge upon its sovereign immunity by allow-

ing a person (or in this case a group) to force the State to

defend itself and one of its regulations in a proceeding

conducted in a federal forum. A few short years ago, such

an argument would have been summarily dismissed, but

the law of sovereign immunity has undergone drastic

changes in the recent years as a result of several very

significant decisions of the United States Supreme Court.

The State begins with a proposition recently recog-

nized by that Court that “the sovereign immunity of the

States neither derives from nor is limited by the terms of

the Eleventh Amendment.” Alden v. Maine, 527 U.S. __,

144 L.Ed. 2d 636, 119 S.Ct. 2240, 2246 (1999). According

to the State, the Alden Court ruled that Congress does not

have the power to abrogate a state’s sovereign immunity

and subject it to private suits in state courts for violations

App. 30

of any federal statutes Congress has enacted under its

Article I powers. Id. at 2266.

The State further argues that Congress lacks the

power to abrogate a state’s immunity from suits by indi-

viduals filed in federal courts for violations of any federal

statutes Congress has enacted under its Article I powers,

citing Seminole Tribe of Florida v. Florida, 517 U.S. 44,

134 L.Ed. 2d 252, 116 S.Ct. 1114 (1996).

The State concludes that, if Congress lacks the power

to force states to defend suits brought by individuals in

federal courts or state courts, then Congress must also

lack the power to submit states to “binding adjudication

before a federal agency in a proceeding commenced by a

private party.”

Respondents argue that the holdings of Alden and

Seminole Tribe should be narrowly viewed and that they

simply do not apply to the case at bar, which does not

involve a “suit” in either state or federal court. Respon-

dents contend that the State’s sovereign immunity claims

are governed by the Eleventh Amendment to the United

States Constitution, which provides as follows:

Suits against states - Restriction of Judicial

Power.

The Judicial power of the United States shall not

be construed to extend to any suit in law or eq-

uity, commenced or prosecuted against one of the

United States by Citizens of another State, or by

Citizens or Subjects of any Foreign State.

If this were indeed the test, the State’s arguments could be

disposed of easily on the grounds that: (1) the administra-

tive procedure at issue does not involve the judicial power

App. 31

of the United States or the jurisdiction of the federal

courts; and (2) the administrative procedure at issue is not

a “suit.”

Unfortunately, this simple and logical analysis has no

place in sovereign immunity jurisprudence.

The Court has been unable to locate any relevant

decisions construing the Act at issue. Additionally, there

appear to be no other federal statutes that provide a

similar administrative procedure, so there are no cases

construing similar provisions in other federal legislation.

The question, therefore, appears to be one of first impres-

sion, and the Court will review the Eleventh Amendment

and the concept of sovereign immunity in some detail

below.

B. The Enactment of the Eleventh

Amendment and its Early Expansion

1. The Enactment of the Eleventh Amendment

The logical starting point for a consideration of these

concepts is the case that gave rise to the passage of the

Eleventh Amendment, Chisholm v. Georgia, 2 U.S. (2.

Dall.) 419, 1 L.Ed. 440 (1793). In Chisholm, the Plaintiff,

who was a citizen of South Carolina, sued the State of

Georgia in the U.S. Supreme Court to enforce Georgia's

promise to pay for goods purchased during the Revolution-

ary War. The suit was initially brought in the Supreme

Court itself, apparently because the suit fell within the

original jurisdiction of that Court as established in Article

III, which provides, “In all cases . . . in which a State shall

be a Party, the supreme Court shall have original Juris-

diction.” Furthermore, the Judiciary Act of 1789 had

provided in part “the Supreme Court shall have exclusive

App. 32

jurisdiction of all controversies of a civil nature, where a

state is a party, except between a state and its citizens;

and except, also, between a state and citizens of other

states and aliens, in which latter case, it shall have

original, but not exclusive jurisdiction.” Ch. 20, § 13, 1

Stat. 73, 80.

Georgia raised the defense of sovereign immunity. The

Supreme Court, however, decided that the case could

proceed in spite of the state’s claim of sovereign immunity.

Although the reported decision is somewhat difficult to

follow, with the Justices writing individual opinions, it

appears that the Chisholm Court based its decision at

least in part upon Article III, Section 2, Clause 1, which

provides in part “the judicial power shall extend ... to

Controversies . . . between a State and Citizens of another

State ... ” Additionally, as discussed above, the Judiciary

Act of 1789 had spoken to suits in which a state was a

party.

Thus, both the Constitution and the Judiciary Act of

1789 apparently allowed actions in which states were

parties. Moreover, nothing in the language of the Consti-

tution prohibited a state from being a Defendant. Several

of the Justices spoke to the fact that the people of the

United States had established their right to be free of the

“sovereignty” of European governments, which, according

to Chief Justice Jay, was based on “feudal principles.” 1

L.Ed. at 463. Justice Wilson summed up his thoughts as

follows:

To the Constitution of the United States the term

sovereign, is totally unknown. There is but one

place where it could have been used with propri-

ety. But, even in that place it would not, perhaps,

have comported with the delicacy of those, who

a oe ee :

App. 33

ordained and established that constitution. They

might have announced themselves “sovereign”

‘ people of the United Stats; but serenely con-

scious of the fact, they avoided the ostentatious

declaration.

1 L.Ed. at 455.

According to the U.S. Supreme Court, speaking some

years later, Chisholm created a “shock of surprise” around

the nation, because at least some of the Founders consid-

ered the concept of a State’s sovereign immunity to have

been “inherent” in the Constitution. See Hans v. Louisi-

ana, 134 U.S. 1, 33 L.Ed. 842, 846 (1890). Thus, according

to the Hans Court, the Eleventh Amendment was “almost

unanimously proposed” in Congress following the Chis-

holm decision and was duly adopted.”

For reasons that are not readily apparent, at least to

those viewing the situation more than 200 years later, the

Eleventh Amendment seems.to have been a rather round-

about way to address the concerns of those who may have

wished to clarify or to establish the concept of the state’s

sovereign immunity. The Eleventh Amendment says

nothing about sovereign immunity. Rather, by its plain

terms, the Eleventh Amendment merely restricts the

* The Eleventh Amendment was submitted to the legislatures of .

the several states by the Third Congress on March 4, 1974. See

Amendment 11, USCA Explanatory Note. Although it is not specifically

set forth in the decision itself, one authority states that the Chisholm

decision was issued in February 1793. See Pfander, History and State

Suability: An “Explanatory” Account of the Eleventh Amendment, 83

Cornell L.Rev. 1269, 1333 (1998). This article provides an excellent

history of the Eleventh Amendment and the reasons for its proposal

and enactment.

App. 34

“judicial power of the United States,” in basically two

classes of cases: any suits (in law or equity) against one of

the United States brought by (1) citizens of another State

or (2) citizens or subjects of any foreign state.

At this point, it should be noted that, when the Elev-

enth Amendment was ratified and added to the Constitu-

tion in 1795 (or 1798),° the federal courts could not

exercise general federal question jurisdiction. It is well-

settled that Article III is not self-executing, at least with

respect to the lower federal courts. Kline v. Burke Con-

struction Co., 260 U.S. 226, 234, 43 S.Ct. 79, 67 L.Ed. 226

(1922). The Judiciary Act of 1789, which created inferior

federal courts, gave those courts jurisdiction over admi-

ralty cases, major federal criminal offenses, and diversity

cases. It did not, however, give them jurisdiction over

questions involving federal law. 15 Moore’s Federal

Practice 3d, § 100 App.01, p. 100App. -4 through -5. It was

not until the Judiciary Act of 1875 that the inferior federal

courts were given general federal question jurisdiction.“

See 18 Stat. 470, pt. 3 (1875).

These facts may explain why the Eleventh Amend-

ment itself does not address the “judicial power of the

United States” in cases involving a suit by a citizen

3 It is somewhat unclear whether the effective date of the Eleventh

Amendment was 1795, when three-fourths of the States ratified it, or

whether it became effective on January 8, 1798, when President John

Adams proclaimed it to be a “Part of the Constitution.” See Pfander,

supra, n. 2, at 1270-71 and n. 5.

‘ The short-lived “Midnight Judges Act” of 1801 very briefly gave

the federal courts general federal question jurisdiction, but that

jurisdiction was withdrawn almost immediately. See Ch. 4, 2 Stat. 89

(1801), repealed in Ch. 8, Stat. 132 (1802).

ners tine Aan BAM S tle ap O6 fear M06 So

App. 35

against his own state. When the Eleventh Amendment

was ratified, the “judicial power” of the inferior federal

courts did not apply to such a case.

2. The Hans Expansion of the Eleventh Amendment

When the lower federal courts were vested with

general federal question jurisdiction in 1875, it became at

least theoretically possible for a citizen to sue his own

state in federal court under that grant of jurisdiction.

Shortly thereafter, the Supreme Court decided its first

major Eleventh Amendment case, Hans v. Louisiana, 134

U.S. 1, 33 L.Ed. 842 (1890). ‘

In Hans, Plaintiff, who was a citizen of the State of

Louisiana, sued the State of Louisiana to recover the

amount of coupons annexed to bonds that had been issued

by the State in 1874.’ Plaintiffs legal claim was that the

* The situation presented in Hans could not have arisen prior to

1875 and, apparently did arise only in 1884 when Hans initially filed

his lawsuit in federal “circuit court.” As discussed above, Art. III, Cl. 2

of the Constitution had given the Supreme Court original jurisdiction

over “all Cases ... in which a State shall be Party.” The jurisdiction

actually granted by Congress to the Supreme Court in the Judiciary Act

of 1789, however, specifically prohibited the exercise of the Supreme

Court’s original jurisdiction in cases “between a State and its citizens.”

See Warren, History of the Federal Judiciary Act of 1789, 37 Harvard L.

Rev. 49, 93 (1923). (“The fear had been expressed in many of the State

Conventions that the language of the Constitution authorized a suit

against a sovereign state by its own citizens, in the Supreme Court, and

the change from the draft Bill was evidently made to allay this fear.”).

Thus, following the enactment of the Judiciary Act of 1875, Plaintiff in

Hans was able to file his action initially in a lower federal court (at the

time, known as the “circuit court.”) The Supreme Court in Hans was

exercising its appellate jurisdiction, not its original jurisdiction.

App. 36

State of Louisiana, by adopting a new Constitution which

specifically repudiated the bond coupons at issue, had

violated Art I, Sec. 10 of the U.S. Constitution (prohibiting

the impairment of contracts).

The Supreme Court held that such an action was

barred by the Eleventh Amendment, even though the

plain language of that Amendment prohibits only suits

against states by citizens of “another state.” In reaching

this decision, the Court relied not upon the language of the

Eleventh Amendment, but upon the “intent” of at least

some [sic] the framers of the Constitution and apparently

what it perceived to be the “gestalt” of the states that had

ratified the Eleventh Amendment almost 100 years

earlier.

The Hans Court began with the proposition that,

under Article III of the Constitution and the Judiciary Act

of 1875, “The judicial power of the United States shall

extend to all cases in law and equity arising under this

Constitution, the laws of the United States and treaties

made or which shall be made under their authority.”

Plaintiff in Hans argued that these jurisdictional clauses

applied regardless of “the character of the parties,” and

regardless of the fact that the Defendant was a state. This

argument, which quite properly focused on the language of

the relevant Constitutional and statutory provisions, was

essentially the same argument that had been made by the

plaintiff in Chisholm. When the State raised the Eleventh

Amendment as a bar to the suit, Plaintiff responded that

the language of the Eleventh Amendment prohibits only

suits against a state that are brought by citizens of an-

other state, or by citizens or subjects of a foreign state.

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App. 37

The Hans Court began its analysis as follows:

It is true, the Amendment does so read; and if

there were no other reason or ground for abating

his suit, it might be maintainable; and then we

should have this anomalous result, that in cases

arising under the Constitution or laws of the

United States, a State may be sued in the federal

courts by its own citizens, though it cannot be

sued for a like cause of action by the citizens of

other States, or a foreign state; and may thus be

sued in the federal courts, although not allowing

itself to be sued in its own courts.

134 U.S. at 10, 33 L.Ed. at 845.

The Hans Court further noted that “the highest

authority of this country” agreed with the lone dissenter in

Chisholm rather than the majority of the Court. The Hans

Court continued:

The other justices [in Chisholm] were more

swayed by a close observance of the letter of Con-

stitution, without regard to former experience

and usage; and because the letter said that the

judicial power shall extend to controversy “be-

tween a State and citizens of another State;” and

“between a State and foreign states, citizens or

subjects,” they felt constrained to see in this lan-

guage a power to enable the individual citizens of

one State, or of a foreign state, to sue another

State of the Union in the federal courts. Justice

Irdell, on the contrary, contended that it was not

_ the intention to create new and unheard of

remedies, by subjecting sovereign States to ac-

tions at the suit of individuals (which he conclu-

sively showed was never done before), but only

by proper legislation, to invest the federal courts

App. 38

with jurisdiction to hear and determine contro-

versies and cases between the parties desig-

nated, but were properly susceptible of litigation

in courts.

134 U.S. at 12, 33 L.Ed. at 846.

Thus, the Hans Court firmly established the extraor-

dinary principle that the Eleventh Amendment and the

Constitution, at least insofar as they may relate to the

sovereign immunity of the states, were not to be inter-

preted solely, or even primarily, by reference to their

language. Rather, both were to be construed with “regard

to former experience and usage,” sometimes at the expense

of their plain language.

After discussing the view of several of the Founders,

the Hans Court stated:

It seems to us that these views of those great ad-

vocates and defenders of the Constitution were

most sensible and just; and they apply equally to

the present case as to that then under discussion.

The letter is appealed to now, as it was then, as a

ground for sustaining a suit brought by an indi-

vidual against a State. The reason against it is

as strong in this case as it was in that. It is an

attempt to strain the Constitution and the law to

a construction never imagined or dreamed of.

Can we suppose that, when the 11th Amendment

was adopted, it was understood to be left open for

citizens of a State to sue their own State in the

federal courts, whilst the idea of suits by citizens

of other States or of foreign states, was indig-

nantly repelled? Suppose that Congress, when

proposing the 11th Amendment, had appended to

it a proviso that nothing therein contained should

prevent a State from being sued by its own

App. 39

citizens in cases arising under the Constitution or

laws of the United States. Can we imagine that it

would have been adopted by the States? The sup-

position that it would is almost an absurdity on

its face.

134 U.S. at 14-15, 33 L.Ed. at 847 (emphasis added.)°

Finally, the Hans Court seemingly felt it necessary to

try to remove some of the sting of its decision by remind-

ing the States of their obligations essentially to “do the

right thing.” The Court stated as follows:

To avoid misapprehension it may be proper to

add that although the obligations of the State

rest for their performance upon its honor in good

faith, and cannot be made the subjects of judicial

cognizance unless the State consents to be sued,

or comes itself into Court, yet where property or

rights are enjoyed under a grant or contract

made by a State they cannot wantonly be evaded.

While the State cannot be compelled by suit to

perform its contract, any attempt on its part to

violate property or rights acquired under its con-

tracts, may be traditionally resisted; and any law

* Thus, the Hans decision rests on an assumption that, if the

federal courts had been able to exercise general federal question

jurisdiction in 1794, the Eleventh Amendment would have included a

bar to citizen’s suing his own state in federal court for a violation of

federal law. While that proposition itself may be subject to debate (see

note 12, infra), is very curious that the Hans Court did not speak to

several major events of the 19th century that perhaps might have led

the Court to conclude that what Congress and the States may have

done in 1794 was not particularly relevant to how the Supreme Court

should interpret the Eleventh Amendment some 100 years later. Those

events were the Civil War and the enactment of the Thirteenth,

Fourteenth, and Fifteenth Amendments.

App. 40

impairing the obligation of contracts under which

such property or rights are held is void and pow-

erless to affect their enjoyment.

It is not necessary that we should enter upon an

examination of the reason of expediency of the

rule which exempts a sovereign State from

prosecution in a court of justice at the suit of in-

dividuals. This is fully discussed by writers on

public law. It is enough for us to declare its exis-

tence. The legislative department of the State

represents its polity and its will, and is called

upon by the highest demands of natural and po-

litical law to preserve justice and judgment, and

to hold inviolate the public obligations. Any de-

parture from this rule, except for reasons most co-

gent (of which the Legislature, and not the courts,

is the judge), never fails in the end to incur the

odium of the world, and to bring lasting injury

upon the State itself. But to deprive the Legisla-

ture of the power of judging what the honor and

safety of the State may require, even at the ex-

pense of the temporary failure to discharge the

public debts, would be attended with greater

evils than such failure can cause.

134 US. at 20-21, 33 L.Ed. at 849 (emphasis added).’

7 It certainly seems that the Civil War would have already cast

doubt on the statements of the Hans Court that the states could be

relied upon to scrupulously guard the federal rights of their citizens.

The post-Civil War Amendments, the Thirteenth (ratified in 1865), the

Fourteenth (ratified in 1868), and the Fifteenth (ratified in 1870), had

clearly provided instances in which a citizen of a state might have cause

to sue his own state, all with the blessing of the Constitution, as

amended.

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App. 41

Hans has been criticized by numerous commentators

and Justices of the Supreme Court who have suggested

that it should be overruled.” Nevertheless, it has been

reaffirmed by the Supreme Court on many occasions, as _

will be discussed below, and it remains binding precedent.

C.| The Young “Exception” to

he Eleventh Amendment

In the approximately 100 years following Hans, the

Eleventh Amendment remained somewhat dormant,

largely because of an “exception” to it recognized by the

Supreme Court in Ex Parte Young, 209 U.S. 123, 52 L.Ed.

714, 28 S.Ct. 441 ie In Young, which was decided only

18 years after Hans, a group of railroads was dissatisfied

with several tariff and rate fixing laws adopted by the

State of Minnesota, which they believed to be unconstitu-

tional. The railroad companies apparently believed that a

direct action against the State of Minnesota, filed in

federal court, would be barred by the Eleventh Amend-

ment. Thus, instead of suing the state directly, they filed

suit against the Attorney General of Minnesota and they

* Perhaps the most often-cited criticism of Hans and the Supreme

Court’s expansive view of the doctrine of sovereign immunity came in

Justice Brennan’s dissent in Atascadero State Hospital v. Scanlon, 473

U.S. 234, 87 L.Ed. 2d 171, 105 S.Ct. 3142 (1985), which was joined by

Justices Marshall, Blackmun, and Stevens. Another major discussion

concerning the possible overruling of Hans can be found in Justice

Brennan’s dissent in Welch v. State Department of Highways, 483 U.S,

468, 97 L.Ed. 2d 389, 107 S.Ct. 2941 (1987), in which Justices Brennan,

Marshall, Blackmun, and Stevens all agreed that Hans should be

overruled.

OE ee ee

App. 42

sought an injunction to prevent him from enforcing the

laws at issue. The Attorney General argued that the action

was in effect one against the State of Minnesota, and was

thereby barred under the Eleventh Amendment.

The Supreme Court held that such an action was

proper and was not barred by the Eleventh Amendment.

The Young Court reasoned that, if the state laws at issue

were indeed unconstitutional, an attempt to enforce them

would be “a proceeding without the authority of, and on

[sic] which does not affect, the state in its sovereign or

governmental capacity.” 123 U.S. at 159, 52 L.Ed. at 729.

Thus, any attempt by the state Attorney General to

enforce these unconstitutional laws would be illegal.

Under such circumstances, he would be stripped of his

“official or representative character,” and the State could

not impart any of its immunity to him.

The Court’s reasoning was not unassailable, however,

because Plaintiffs had to show “state action,” as an essen-

tial element of their claim under the Fourteenth Amend-

ment. Thus, the Young Court recognized the proposition

that the action of the State Attorney General constituted

“state action” for purposes of the Fourteenth Amendment,

but did not constitute “state action” for purposes of the

Eleventh Amendment. 123 U.S. at 168, 59 L.Ed. at 732. Be

that as it may, Young gave individuals a convenient way

essentially to sue states for alleged violations of federal

rights without violating the Eleventh Amendment.

D. The Constructive Waiver Theory

In 1964, the Supreme Court announced and applied a

sovereign immunity “constructive waiver” theory in

Parden v. Terminal R. Co., 377 U.S. 184, 12 L.Ed. 2d 233,

App. 43

84 S.Ct. 1207 (1964). In Parden, the State of Alabama

owned and operated a railroad in interstate commerce.

Plaintiffs, who were employees of the railway, were

injured in the course of their employment, and brought an

action against the railway under the Federal Employers

Liability Act (FELA). The State moved to dismiss on

grounds that the railway was an agency of the state and,

therefore, an action against it was barred by the Eleventh

Amendment.

Justice Brennan, writing for the Court, stated two

issues for decision: (1) Did Congress in enacting the FELA

intend to subject a State to suit under these circum-

stances? and (2) Did Congress have the power to do so, as

against the State’s claim of sovereign immunity? 377 U.S.

at 187, 12 L.Ed. 2d at 237. The Parden Court answered

both questions in the affirmative. First, the Court held

that Congress meant what it said when it made FELA

applicable to “every” common carrier by railroad in inter-

state commerce. 377 U.S. at 187, 12 L.Ed. 2d at 237. The

Parden Court stated in part as follows:

To read a “sovereign immunity exception” into

the [FELA], would result, moreover, in a right

without a remedy; it would mean that Congress

made “every” interstate railroad liable in damage

employees but left one class of such employees —

those whose employers happened to be state

owned — without any effective means of enforcing

that liability. We are unwilling to conclude that

Congress intended so pointless and frustrating a

result.

377 U.S. at 190, 12 L.Ed. 2d at 238.

With regard to the second question the Parden Court

found that, “The States surrendered a portion of their

App. 44

sovereignty when they granted Congress the power to

regulate commerce [in the Constitution].” 377 U.S. at 191,

12 L.Ed. 2d at 239. The majority explicitly stated that

Congress had the power, when acting under the Interstate

Commerce Clause, to override any sovereign immunity

that may otherwise have been retained by the states.

At the same time, however, the Parden Court refused

to find that the State’s sovereign immunity had actually

been overridden by Congress. Instead, the Court ruled

that the State had essentially waived its sovereign immu-

nity by beginning operation of a railroad when it essen-

tially “knew or should have known” that the FELA would

be applicable. The Court stated:

Recognition of the congressional power to render

a State sueable under the FELA does not mean

that the immunity doctrine, as embodied in the

Eleventh Amendment with respect to citizens of

other States and as extended to the State’s own

citizens by the Hans case, is here being overrid-

den. It remains the law that a State may not be

sued by an individual without its consent. Our

conclusion is simply that Alabama, when it be-

gan operation of an interstate railroad approxi-

mately 20 years after enactment of the FELA,

necessarily consented to such suit as was author-

ized by that Act.

377 U.S. at 192, 12 L.Ed. 2d at 240.

The four dissenters in Parden argued that a waiver of

sovereign immunity should not be found unless Congress

had “expressly declared that any State which undertakes

given regulable [sic] could be deemed thereby to have

waived its immunity.” 377 U.S. at 199, 12 L.Ed. 2d at 244.

ee TE

App. 45

E. The Restriction of the Young Exception

1. Edleman v. Jordan

Only ten years later, in 1974, it became apparent that

the Supreme Court was beginning a retreat from at least

some of the doctrines that had limited the sovereign

immunity of the states. See Edleman v. Jordan, 415 U.S.

651, 39 L.Ed. 2d 662, 94 S.Ct. 1347 (1974). In Edleman,

plaintiffs filed a class action against various officers of the

State of Illinois. Plaintiff complained that these state

officials were administering the federal-state programs of

Aid to the Aged, Blind and Disabled in a manner inconsis-

tent with various federal regulations and the Fourteenth

Amendment. Plaintiff sought an injunction, requiring the

state officers to properly enforce the federal law in the

future. Plaintiff also sought “equitable relief,” in the form

of an injunction requiring defendants to award to the class

past benefits that had been allegedly wrongfully withheld.

The state officers conceded that the prospective

injunctive relief was proper under Ex Parte Young. The

state officials argued, however, that the “equitable relief”

which required the State to pay past benefits was essen-

tially an award of damages that was barred by the Elev-

enth Amendment.

The significance of the Supreme Court’s decision in

Edlernan can best be understood if one first considers the

decision of the Seventh Circuit in that case, which the

Supreme Court reversed. See Jordan v. Weaver, 472 F.2d

985 (7th Cir. 1978). Plaintiffs’ lawsuit was clearly one

brought against the state officials, not the state itself,

under Ex Parte Young. The Seventh Circuit began its

analysis by noting that four different three-judge court

App. 46

decisions, which had rejected identical Eleventh Amend-

ment arguments, had been previously appealed to the

Supreme Court, and the Supreme Court had summarily

affirmed each case. 472 F.2d at 989.

Next, the Seventh Circuit refused to read Young as

applying only where a Plaintiff sought prospective injunc-

tive relief, rather than retrospective injunctive relief. The

Seventh Circuit cut to the heart of the matter when it

stated:

Of course, there is nothing inherent in [the

Young] fiction which precludes its_ utilization to

allow equitable relief other than an injunction

against future conduct. The state official can be

said to be “stripped of his official or representa-

tive character” when ordered to pay out benefits

he withheld in violation of federal law.

472 F.2d at 990 n.10.

The Seventh Circuit also noted that many mandatory

injunctions had been granted on the authority of Ex Parte

Young that had “certainly had an impact on the State

Treasury by requiring the expenditure of public funds.”

472 F.2d at 991 (citing cases). The Seventh Circuit stated

that the prospective injunctive relief granted by the

District Court, which required state officials to comply

with federal law in the future, would require the expendi-

ture of “more monies than the seriously disputed part of

the judgment requiring the payment of wrongfully with-

held benefits!” Jd. The Seventh Circuit concluded,

“whether a liability is declared which must be met from

the State’s public funds is not the touchstone of the Elev-

enth Amendment’s applicability.” Id.

ii i alee iain:

App. 47

The Supreme Court, in a 5-4 decision, agreed with the

state officials that the retroactive equitable relief was

improper. Justice Rehnquist, writing the majority opinion,

stated the “well-established” proposition that “even though

a State is not named a party to the action, the suit may

nevertheless be barred by the Eleventh Amendment.” He

continued:

j [WJhen the action is in essence one for the recov-

ery of money from the state, the state is the real,

substantial party in interest and is entitled to

invoke its sovereign immunity from suit even

though individual officials are nominal defen-

dants.

415 U.S. at 663, 39 L.Ed. 2d at 672, quoting Ford Motor

Co. v. Department of Treasury, 323 U.S. 459, 464, 89 L.Ed.

at 464, 65 S.Ct. 347 (1945).

Thus, the Edleman Court reasoned, a suit by private

parties seeking to impose a liability that must be paid

from public funds in the state treasury is barred by the

Eleventh Amendment.’ 415 U.S. at 663, 39 L.Ed. 2d at

i 673.

* The Edleman majority cited three cases for the proposition that,

even though individual officers are nominal defendants, the state is the

real substantial party in interest if the suit is one for recovery of money

from the State Treasury, namely Ford Motor Co. v. Department of

Treasury, 323 U.S. 459, 89 L.Ed. 389, 65 S.Ct. 347 (1945), Great

Northern Life Insurance Co. v. Read, 322 U.S. 47, 88 L.Ed. 1121, 64

S.Ct. 873 (1944), and Kennecott Copper Corp. v. State Tax Comm’n, 327

U.S. 573, 90 L.Ed. 862, 66 S.Ct. 745 (1946). As some commentators

have noted, these three cases all involved state tax claims. See Le-

Clercq, State Immunity and Federal Judicial Power - Retreat From

National Supremacy, 27 Florida L. Rev. 361, 378 n.13 (1975), which

(Continued on following page)

App. 48

The Edleman majority refused to read Ex Parte Young

as meaning that “any form of relief may be awarded

against a state officer, no matter how closely it may in

practice resemble a money judgment payable out of the

state treasury, so long as the relief may be labeled ‘equita-

ble’ in nature.” 415 U.S. at 666, 39 L.Ed. 2d at 674-75. The

Edlemam [sic] Court also declined to follow the precedent

cited by the Seventh Circuit, because the Supreme Court

had summarily disposed of those cases without “any

substantive discussion of this or any other issues raised by

the parties.” 415 U.S. at 670, 39 L.Ed. 2d at 677.

Justice Brennan, dissenting, reiterated his position

set out in Parden, that the states had surrendered part of

their sovereign immunity when they ratified the Constitu-

tion, at least insofar as they granted Congress specifically

enumerated powers. Because Congress had the authority

to pass the act in question under the Commerce Clause, he

concluded that the State had no immunity. Dissenting

Justices Marshall and Blackmun stated that, by agreeing

to accept federal funds under the Social Security Act, the

state had waived any immunity it may have had from

federal court orders requiring the retroactive payment of

welfare benefits. Justice Douglas, dissenting, noted the

discusses the fact that the brief of respondents in Edleman had

distinguished these three cases arguing “these cases [a]t most ..

reflect the unique considerations that surround federal judicial

interference with enforcement of state tax law and the underlying

policy of the federal courts not to decide these cases where an adequate

remedy is otherwise available.” Professor LeClercq further noted that,

unlike Kennecott, Ford and Read, Edleman presented “important

questions of federal public policy in which state law [was] largely

irrelevant.” Jd.

WRC DENIS ae ae veh RR Si Dae

on Alls: salen Wteatienle

App. 49

fact that the Eleventh Amendment restricts the “judicial

power” of the United States in certain classes of cases, and

applies to “any suit in law or equity.” 415 U.S. at 685, 39

L.Ed. 2d at 685. He continued:

If that “judicial power,” or “jurisdiction,” if one

prefers that concept, may not be exercised even

in ‘any suit in ... equity then Ex Parte Young

should be overruled. But there is none eager to

take the step. Where a State has consented to

join a federal-state cooperative project, it is real-

istic to conclude that the State has agreed to as-

sume its obligations under that legislation. There

is nothing in the Eleventh Amendment to sug-

gest a difference between suits at law and suits

in equity, for it treats the two without distinc-

tion. If common sense has any role to play in con-

stitutional education, once there is a waiver of

immunity it must be true that it is complete so

far as effective operation of the state-federal joint

welfare program is concerned.

Id.

Edleman is important for two holdings. First, it

restricts the relief available under Ex Parte Young to

prospective injunctive relief. Second, it deprives a plaintiff

of the potential remedy of seeking damages from Defen-

dants sued in their individual capacities under Ex Parte

Young, if a court concludes that plaintiff is not really

seeking damages against the Defendants individually, but

instead is seeking damages that will be paid out of a

App. 50

state’s treasury. How a court may determine this distinc-

tion is extremely unclear.”

2. Pennhurst State School & Hospital v. Halderman

Another milepost in the Supreme Court’s restriction of

Ex Parte Young came in 1984, with the decision in Penn-

hurst State School & Hospital v. Halderman, 465 U.S. 89,

79 L.Ed. 2d 67, 104 S.Ct. 900 (1984) (hereinafter “Penn-

hurst II’). In that case, the Court held that the Eleventh

Amendment prohibited an individual from suing her own

state in federal court for a violation of state law, and that

the Young exception did not apply.

The case had previously been before the Supreme

Court in 1981. See Pennhurst State School & Hospital v.

Halderman, 451 U.S. 1, 67 L.Ed. 2d 694, 101 S.Ct. 1531

(1981) (hereinafter “Pennhurst I”). In Pennhurst I, Plain-

tiff brought a class action lawsuit on behalf of the patients

at a state institution for the care of “the mentally re-

tarded.” 465 U.S. at 92, 79 L.Ed. 2d at 73. Pennhurst I

sought both damages and injunctive relief. Plaintiffs

claimed violations of a number of federal laws (the Eighth

Edleman sued the state officials themselves, and did not request any

monetary relief against the state. The Supreme Court stated, however,

“It [the monetary relief ordered by the Seventh Circuit] will to a virtual

certainty be paid from state funds, and not from the pockets of the

individual state officials who were the defendants in the action.” 425

U.S. at 668, 39 L.Ed. 2d at 676. Additionally, the Court stated “these

funds [the retroactive award of money damages) will obviously not be

paid out of the pocket of petitioner Edleman.” 415 U.S. at 664, 39

L.Ed. 2d at 673. But the Court never explained why that fact was so

obvious.

Nadie ie da

amet:

App. 51

and Fourteenth Amendments, § 504 of the Rehabilitation

Act of 1973, and the Developmentally Disabled Assistance

and Bill of Rights Act), and state law as well. The District

Court ruled in favor of Plaintiffs, granting prospective

injunctive relief, and the Third Circuit affirmed most of

that judgment. The Third Circuit, however, relied solely

on the “Bill of Rights” provision in the federal Develop-

mentally Disabled Assistance and Bill of Rights Act.

On the first appeal, the Supreme Court in Pennhurst I

found that that Act did not create any substantive rights.

The Court remanded the case to the Third Circuit to

determine if the remedial order could be supported on the

basis of state law, the Constitution, or § 504 of the Reha-

bilitation Act.

On remand, the Third Circuit affirmed its prior

judgment solely on the basis that Defendants had violated

Pennsylvania state law, and that court did not reach any

of the remaining issues of federal law.

On the second appeal, the Supreme Court revised and

remanded, holding that Plaintiffs’ state law claims were

barred by the Eleventh Amendment, and that the “excep-

tion” of Ex Parte Young did not apply, even though the

lower court had granted only prospective injunctive relief.

The Pennhurst II Court began its analysis with the

following “overview” of Eleventh Amendment jurispru-

dence, at least to that point:

When the suit is brought only against state offi-

cials, a question arises as to whether that suit is

a suit against the State itself. Although prior de-

cisions of this Court have not been entirely con-

sistent on this issue, certain principals [sic] are

well established. The Eleventh Amendment bars

App. 52

a suit against State officials when “the State is

the real, substantial party in interest,” ... Thus,

“(t]he general rule is that relief sought nominally

against an officer is in fact against the sovereign

if the decree would operate against the latter.”

_,. And, as when the State is named as the De-

fendant, a suit against state officials that is in

fact a suit against a State is barred regardless of

whether it seeks damages or injunctive relief.

The Court has recognized an important exception

to this general rule: a suit challenging the consti-

tutionality of a state official’s action is not one

against the State [citing Young].

465 U.S. at 101-02, 79 L.Ed. 2d at 79. The Court went on

to note, however, that theory of Young “has not been

provided an expansive interpretation,” citing Edleman.

465 U.S. at 102, 79 L.Ed. 2d at 80.

Plaintiffs in Pennhurst II argued that the Young

exception applied and that Edleman did not bar their

lawsuit, because the courts below had ordered only pro-

spective injunctive relief. But the Supreme Court deter-

mined the “basis of the doctrine established in Young and

Edleman” did not apply where Plaintiffs alleged only

violations of state law, rather than federal law. The Court

specifically noted, “in deciding this case we must be guided

by ‘the principles of federalism that inform Eleventh

Amendment doctrine.’” 465 U.S. at 100, 79 L.Ed. 2d at 78

(citation omitted). In a rather candid and “practical”

analysis, the Court stated in pertinent part as follows:

(T]he Young doctrine has been accepted as neces-

sary to permit the federal courts to vindicate fed-

eral rights and hold state officials responsible to

“the supreme authority of the United States.” .. .

As Justice Brennan has observed, “Ex Parte

App. 53

Young was the culmination of efforts by this

Court to harmonize the principles of the Elev-

enth Amendment with the effective supremacy of

rights and powers secured elsewhere in the Con-

stitution.” ... Our decisions repeatedly have em-

phasized that the Young doctrine rests on the

need to promote the vindication of federal

rignts. ....

The Court has also recognized, however, that the

need to promote the supremacy of federal law

must be accommodated to the constitutional im-

munity of the States. This is the significance of

Edleman v. Jordan, supra. We recognized that

the prospective relief authorized by Young has

permitted the Civil War Amendments to the

Constitution to serve as a sword, rather than

merely a shield, for those whom they were de-

i signed to protect.” ... But we declined to extend

| the fiction of Young to encompass retroactive re-

lief, for to do so would effectively eliminate the

constitutional immunity of the States... In sum,

) Edleman’s distinction between prospective and

retroactive relief fulfills the underlying purpose

of Ex Parte Young while at the same time pre-

serving to an important degree the constitutional

immunity of the States.

Cre ie initialed ae

This need to reconcile competing interests is

wholly absent, however, when a Plaintiff alleges

that a state official has violated state law. In

such a case the entire basis for the doctrine of

Young and Edleman disappears.

465 U.S. at 105-06, 79 L.Ed. 2d at 81-82.

Justice Stevens, joined by Justices Brennan, Mar-

shall, and Blackmun, dissented. The thrust of the dissent-

ing opinion was that the question addressed by majority,

App. 54

| i.e. whether a federal court may award prospective injunc-

tive relief on the basis of state law without violating the

Eleventh Amendment, had already been answered af-

firmatively by the Court “many times in the past.” The

dissent accused the majority of repudiating “at least

twenty-eight cases, spanning weil over a century of this

Court’s jurisprudence, proclaiming instead that federal

courts have no power to enforce the will of the states by

enjoining conduct because it violates state law.” 464 U.S.

127, 79 L.Ed. 2d at 96.

As the dissent also pointed out, the “immunity-

stripping” rationale of Young plainly applies to a case in

which a state official violates state law. 465 U.S. at 147, 79

L.Ed. 2d at 109.

In response to this point, the majority simply asserted

that Edleman “shows that the broad ultra vires theory

enunciated in Ex Parte Young .. . and in some of the cases

quoted by the dissent has been discarded.” 465 U.S. at 114

n.25, 79 L.Ed. 2d at 87 n.25 (emphasis added).

The dissent concluded as follows:

Throughout its history this Court has derived

strength from institutional self-discipline. Ad-

herence to settled doctrine is presumptively is

[sic] the correct course. Departures are, of course,

occasionally required by changes in the fabric of

our society. When a Court rather than a legisla-

ture, initiates a departure, it has a special obli-

gation to explain and to justify the new course on

which it has embarked. Today, however, the

Court casts aside well-settled respected doctrine

that plainly commands affirmance of the Court of

Appeals — the doctrine of she law of the case, the

doctrine of stare decisis (the Court repudiates at

“ see enrltn Shy BIRNAC RT n BNDem RN Ue nell ON RN

App. 55

least twenty-eight cases), the doctrine of sover-

eign immunity, the doctrine of pendant jurisdic-

tion, and the doctrine of judicial restraint. No

sound reason justifies the further prolongation of

this litigation or this Court’s voyage into the sea

of undisciplined lawmaking.

465 U.S. at 164-67, 79 L.Ed. 2d at 120-121.

3. Idaho v. Coeur d’Alene Tribe of Idaho

Another significant restriction of the Ex Parte Young

doctrine was set forth in Idaho v. Coeur d’Alene Tribe of

Idaho, 521 U.S. 261, 188 L.Ed. 2d 438, 117 S.Ct. 2028

(1997). In Coeur d’Alene, a Tribe sued the state of Idaho in

federal court claiming that it owned the banks of and

submerged lands under Lake Coeur d’Alene. Relying upon

Ex Parte Young, Plaintiff sued state officials for a declara-

tory judgment to establish its ownership of the Lake and

the submerged lands, and a prospective injunction, prohib-

iting the state from regulating the Tribe’s rights of exclu-

sive use and occupancy. Plaintiffs’ claim was based on

federal law, namely an Executive Order of November 8,

1873, which apparently had set out the original bounda-

ries of the Coeur d’Alene reservation. Alternatively, the

Tribe claimed ownership of the lands pursuant to “unex-

tinguished aboriginal title.” 521 at U.S. at __, 138

L.Ed. 2d at 455.

The Supreme Court, however, held that the lawsuit

was barred by Idaho’s sovereign immunity. Essentially,

the Court held that the suit at issue was “the functional

equivalent of a quiet title action which implicated special

sovereignty interests.” 521 U.S. at __, 138 L.Ed. 2d at

455.

App. 56

The Couer d’Alene Court also noted that the lawsuit

could have been brought in Idaho state court, but Plain-

tiffs had chosen to file it in federal court. The Court stated:

It is apparent, then, that if the Tribe were to

prevail, Idaho’s sovereign interest in its lands

and waters would be affected in a degree fully as

intrusive as almost any conceivable retroactive

levy upon funds in its Treasury. Under these

particular and special circumstances, we find the

Young exception inapplicable. The dignity and

status of its statehood allows Idaho to rely on its

Eleventh Amendment immunity and to insist

upon responding to these claims in its own

courts, which are open to hear and determine the

case.

521 U.S. at __, 138 L.Ed. 2d at 459 (emphasis added).

F. Questions About the Power of Congress to

Abrogate the States’ Sovereign Immunity

The extent of the Court’s changing view of sovereign

immunity became very apparent in Pennsylvania v. Union

Gas Company, 491 U.S. 1, 105 L.Ed. 2d 1, 109 S.Ct. 2273

(1989). The questions presented in Union Gas were the

same as those that had been presented in Parden only 25

years earlier, except that a different statute was involved.

The Court stated the issues in Union Gas as follows:

This case presents the questions whether the

Comprehensive Environmental Response Com-

pensation and Liability Act of 1980 (CERCLA)

_.. as amended by the Superfund Amendments

and Reauthorization Act of 1986 (SARA) ...

permits a suit for monetary damages [by an indi-

vidual] against a State in federal court and, if so,

App. 57

whether Congress has the authority to create

such a cause of action when legislating pursuant

to the Commerce Clause.

491 U.S. at 5, 105 L.Ed. 2d at 10.

”

As in Parden, a majority of the Court answered “yes

to the first question, arguing that the referenced statutes

fully expressed an intent to hold states liable in damages

for conduct prohibited by the statute.

The second question, however, proved to be much

more difficult, giving rise to five separate opinions. Only

four justices specifically joined in Justice Brennan’s

opinion that Congress had the power to provide for the

recovery of damages in lawsuits by individuals against

states. These four justices agreed with the Parden ration-

ale that Congress has the authority to abrogate the states’

sovereign immunity when legislating pursuant to the

plenary powers granted it by the Constitution. 491 U.S. at

15, 105 L.Ed. 2d at 16.

Justice Scalia, concurred in part and dissented in

part, in an opinion joined by Chief Justice Rehnquist,

Justice O’Connor, and Justice Kennedy. He concluded that

the statutes at issue provided that the states were liable to

private persons for money damages. He then considered

the “continuing validity” of Hans, determining that it

should not be overruled. 491 U.S. at 35, 105 L.Ed. 2d at

30. The thrust of his opinion was that Parden’s “holding”

that the Commerce Clause gave Congress the power to

abrogate the sovereign immunity of the States, should be

overruled. 491 U.S. at 43, 105 L.Ed. 2d at 35.

Justice White, concurring in the judgment in part and

dissenting in part, joined by Chief Justice Rehnquist,

App. 58

Justice O’Connor, and Justice Kennedy believed that the

statutes at issue did not contain an “unmistakably clear”

statement by Congress that it wished to abrogate the

States’ sovereign immunity. 491 U.S. at 55, 105 L.Ed. 2d

at 43. In a second part of his opinion, Justice White

recognized that he was in the minority in that view, and

he stated, “I agree with the conclusion reached by Justice

Brennan ... that Congress had the authority under

Article I to abrogate the Eleventh Amendment immunity

of the States, although I do not agree with much of his

reasoning.” 491 U.S. at 57, 105 L.Ed. 2d at 43-44. Chief

Justice Rehnquist, Justice O’Connor and Justice Kennedy

did not join that part of his opinion.

Finally, Justice O’Connor, dissenting, believed that

Congress did not have the power, acting under the Com-

merce Clause, to abrogate the States’ sovereign immunity.

491 U.S. at 57, 105 L.Ed. 2d at 44. She recognized that

“that view does not command a majority of the Court. ... =

Id. She further agreed that the relevant statute did not

contain an “unmistakably clear” statement by Congress.

Id.

In the final analysis, five of the Justices in Union Gas

had agreed that Congress had the power to abrogate the

states’ sovereign immunity when legislating under Article

I. The other four did not.

Union Gas is also notable because it contains, in the

concurring opinion of Justice Stevens, a very candid and

straightforward discussion of the different and conflicting

views of the Eleventh Amendment and the doctrine of

sovereign immunity that had been expressed in past

Supreme Court cases. Justice Stevens noted that the

were

Pa tepling std 1

App. 59

Court had drawn a “distinction between our two Eleventh

Amendments.” He stated in part as follows:

There is first the correct and literal interpreta-

tion of the plain language of the Eleventh

Amendment. ... In addition, there is the defense

of sovereign immunity that the Court has added

to the text of the Eleventh Amendment in cases

like Hans v. Louisiana, 134 U.S. i (1890). With

respect to the former — the legitimate scope of the

Eleventh Amendment limitation on federal judi-

cial power — I do not believe Cengress has the

power under the Commerce Clause, or under any

other provision of the Constitution, to abrogate

the State’s immunity. A statute cannot amend

the Constitution. With respect to the latter — the

judicially created doctrine of state immunity

even from suits alleging violation of federally

protected rights — I agree that Congress has ple-

nary power to subject the State to suit in federal

court.

In [Hans], the Court departed from the plain

language, purpose, and history of the Eleventh

Amendment, extending to the State’s immunity

from suits premised on the “arising under” juris-

dictional grant of Article III. Later adjustments

to this rule,.as well as the Court’s inability to de-

velop a coherent doctrine of Eleventh Amendment

immunity, make clear that this expansion of state

immunity is not a matter of Eleventh Amendment

law at all, but rather is based on a prudential in-

terest in federal-state comity and a concern for

“Our Federalism.” The Eleventh Amendment, as

does Article III, speaks in terms of “judicial

power.” The question that must therefore ani-

mate the inquiry in any actual Eleventh

App. 60

Amendment case is whether the federal court

has power to entertain the suit. In cases in which

theFe-is-no such power, Congress cannot provide

— even through a “clear statement.” Many of this

Court’s decisions, however, purporting to apply

the Eleventh Amendment, do not deal with judi-

cial power at all. Instead, the issue of immunity

is treated as a question of the proper role of the

federal courts in the amalgam of federal-state re-

lations. It is in these cases that congressional ab-

rogation is appropriate.

491 U.S. at 23-25, 105 L.Ed. 2d at 22-23 (emphasis added).

Justice Stevens felt that the plain language of [sic]

Eleventh Amendment did not apply and, therefore, that

Congress did have the power to allow a damage remedy

against the states under the circumstances. 491 U.S. at

28-29, 105 L.Ed. 2d at 25.

G. The Recognition that Congress Lacks the Power

to Abrogate the States’ Sovereign Immunity.

Seven years after the decision in Union Gas, the

membership of the Supreme Court had changed signifi-

cantly, and the stage was set for what would become the

most important Eleventh Amendment/sovereign immunity

case since Hans, Seminole Tribe of Florida v. Florida, 517

U.S. 44, 134 L.Ed. 252, 116 S.Ct. 1114 (1996).

In that case, the Seminole Tribe of Florida sued the

State and its Governor for allegedly failing to negotiate in

good faith concerning a gaming compact, as required by

the Indian Gaming Regulatory Act (IGRA). Plaintiffs did

not seek damages; rather they sought an injunction to

require the State of Florida to negotiate a gaming compact

> ,

ee re ae

ccd habs eR Dost eat Selanne te Rit

App. 61

in good faith. Plaintiffs also sued the Governor of Florida,

under Ex Parte Young, seeking a similar injunction.

The State of Florida argued that the Eleventh

Amendment barred any action against it, in spite of the

fact that the IGRA contained an explicit statement which

purported to abrogate the State’s Eleventh Amendment

immunity. The IGRA had been passed pursuant to the

Indian commerce clause (U.S. Const., Art. I, § 8, cl. 3),

which gives Congress the power to “regulate Commerce

... with Indian Tribes.”

In shifting to a dramatic new direction in Eleventh

Amendment jurisprudence, the Seminole Tribe Court

overruled Union Gas and held that Congress, acting under

Article I of the Constitution, simply does not have the

power to abrogate a State’s “Eleventh Amendment”

immunity, no matter how clearly it expresses its desire to

do so.

Chief Justice Rehnquist began the Court’s analysis as

follows:

Although the text of the [Eleventh] Amendment

would appear to restrict only the Article III di-

versity jurisdiction of federal courts, “we have

understood the Eleventh Amendment to stand

not so much for what it says, but for the presup-

position ... which it confirms.” ... That presup-

position, first observed over a century ago in

[Hans], has two parts: first, that each State is a

sovereign entity in our federal system; and sec-

ond, that “(i]t is inherent in the nature of sover-

eignty not to be amenable to the suit of an

individual without its consent,” ... For over a

century we have reaffirmed that federal jurisdic-

tion over suits against unconsenting States “was

App. 62

not contemplated by the Constitution when es-

tablishing the judicial power of the United

States.”

517 U.S. at 54, 134 L.Ed. 2d at 265 (citations omitted).

The Court quickly concluded that the IGRA clearly

expressed Congress’ intent to abrogate the states’ sover-

eign immunity. The Court then turned to the question

whether the IGRA was passed “pursuant to a valid exer-

cise of [congressional] power.” Plaintiffs apparently had

argued that this issue should be viewed with some “char-

ity” by the Court, because they were seeking only prospec-

tive injunctive relief. In response, the Court stated as

follows:

Petitioner suggests that one consideration weigh-

ing in favor of finding the power to abrogate here

is that the Act authorizes only prospective in-

junctive relief rather than retroactive monetary

relief. But we have often made it clear that the

relief sought by a plaintiff suing a State is irrele-

vant to the question whether the suit is barred

by the Eleventh Amendment... . We think it fol-

lows a fortiori from this proposition that the type

of relief sought is irrelevant to whether Congress

has power to abrogate States’ immunity. The

Eleventh Amendment does not exist solely in or-

der to “preven(t] a federal court judgment that

must be paid out of a State’s treasury... ; it also

serves to avoid “the indignity of subjecting a

State to the coercive process of judicial tribunals

at the insistence of private parties. ...”

517 U.S. at 58, 134 L.Ed. 2d at 267 (citations omitted).

App. 63

The Seminole Tribe Court continued its analysis by

noting that the Court had upheld Congressional abroga-

tion of the States’ sovereign immunity only in two situa-

tions: (1) cases in which Congress had acted pursuant to

§5 of the Fourteenth Amendment” and (2) one case,

Pennsylvania v. Union Gas Co., supra, in which Congress

had acted under the Interstate Commerce Clause. 517

U.S. at 59, 134 L.Ed. 2d at 268. The Court found that no

“principled distinction” could be drawn between the Indian

Commerce Clause and the Interstate Commerce Clause.

After discussing the fact that the decision in Union Gas

was a plurality decision, that it was a “deeply fractured

decision,” that it “essentially eviscerated our decision in

Hans,” and that it had “proved to be a solitary departure

from established law,” the Court specifically overruled

Union Gas. 517 U.S. at 64-66, 134 L.Ed. 2d at 271-73.

Next, the Seminole Tribe Court gave a show of sup-

port to Hans and its interpretation of the Eleventh

Amendment:

The dissent mischaracterizes the Hans opinion.

That decision found its roots not solely in the

common law of England, but in the much more

fundamental “jurisprudence in all civilized na-

tions.”

The dissent’s lengthy analysis of the text of the

Eleventh amendment is directed at a straw man

" Section 5 of the Fourteenth Amendment provides, “The Congress

shall have power to enforce, by appropriate legislation, the provisions of

this article.”

App. 64

— we long have recognized that blind reliance

upon the text of the Eleventh Amendment is “to

strain the Constitution and the law to a con-

struction never imagined or dreamed of.” ... The

text dealt in terms only with the problem pre-

sented by the decision in Chisholm; in light of

the fact that the federal courts did not have fed-

eral question jurisdiction at the time the

Amendment was passed (and would not have it

until 1875), it seems unlikely that much thought

was given to the prospect of federal-question ju-

risdiction over the States.

517 US. at 69-70, 134 L.Ed. 2d/at 275."

After finding that Plaintiffs’ claims against the State

of Florida were barred by the Eleventh Amendment, the

Court proceeded to analyze Plaintiffs’ claims for injunctive

2 As discussed above, the rationale of Hans rests in large part

upon the assumption that, if the federal courts had been able to

exercise general federal question jurisdiction at the time the Eleventh

Amendment was written, the Amendment would have specifically

prohibited a citizen from suing his own state. See discussion at note 6,

supra. The Seminole Tribe Court’s statement that not “much thought”

was given to this point seemingly indicates that Hans rests upon a

faulty assumption.

This statement on the part of the majority, however, was seriously

challenged by Justice Souter in his dissent, wherein he noted that the

first post-Chisholm draft of the Eleventh Amendment basically

provided that “no state” could be “made a party defendant” in any

federal court in a suit brought by “any person or persons.” 517 U.S. at

110-111, 134 L.Ed. 2d at 300-301. He noted that Congress took no

action on that draft, and he concluded that “the Amendment as

ultimately adopted two years later could hardly have been meant to

limit federal-question jurisdiction, or it would never have left the States

open to federal-question suits by their own citizens.” 517 U.S. at 112,

134 L.Ed. at 301.

App. 65

relief against the Governor of Florida, brought under Ex

Parte Young. In doing so, the court announced another

significant restriction of the Ex Parte Young doctrine. The

Court found that Congress had crafted an “intricate

remedial scheme” in the IGRA. In considering this reme-

dial scheme (which the Court had just held could not be

enforced against the State of Florida because it violated

the Eleventh Amendment), the Court noted that the

sanctions set forth therein were “quite modest,” when

compared with the “more complete and more immediate

relief [that] would be available under Ex Parte Yuung.”

517 U.S. at 75, 134 L.Ed. 2d at 278-79. The Court took this

fact as an indication that Congress, in providing for only

“modest” relief in the IGRA, did not wish to allow a “more

complete” remedy under Ex Parte Young. Therefore,

despite the fact that Plaintiff could not enforce the IGRA

remedies, the Court held that Plaintiff could not maintain

an action against the Governor of Florida under Ex Parte

Young. Id.

While four Justices wrote approximately 70 pages of

dissent in Seminole Tribe, those views are now clearly the

minority opinion, and they will not be discussed herein.

H. The Application of the Doctrine of Sovereign

Immunity to Federal Claims Brought in State

Court and Further Expansion of the Doctrine.

In the wake of Seminole Tribe, the following results

were quite clear. First, the “Eleventh Amendment” prohib-

ited Plaintiffs’ lawsuit for injunctive relief against the

State of Florida. Regardless of its expressed intent, Con-

gress simply lacked the power, when legislating under

Article I, to override a state’s sovereign immunity. Second,

Plaintiffs could not maintain an Ex Parte Young action

App. 66

against the Governor of Florida even for prospective

injunctive relief. Thus, it seemed that Congress had

created a federal right in favor of Plaintiffs, but Plaintiffs

had no federal forum in which to attempt to vindicate that

right. The possibility remained open, however, that future

plaintiffs could sue a state in state court, where the

eleventh Amendment would not apply.

That door was shut some three years later with the

Supreme Court's decision in Alden v. Maine, 527 U.S. __,

144 L.Ed. 2d 636 (1999). In Alden, a group of state em-

ployees had sued the State of Maine in federal court for

alleged violations of the overtime provisions of the Fair

Labor Standards Act (FLSA). While that lawsuit was

pending, the Supreme Court decided Seminole Tribe.

Applying Seminole Tribe, the federal district court

had dismissed Plaintiffs’ FLSA claims, which dismissal

was affirmed by the First Circuit. Because Plaintiffs were

seeking money damages, they could not bring an Ex Parte

Young action. Therefore, they tried the only route that was

left open following Seminole Tribe — they filed suit in state

court alleging a violation of the FLSA. The state trial court

dismissed the lawsuit on the basis of sovereign immunity.

The Supreme J udicial Court of Maine affirmed that

decision.

The U.S. Supreme Court granted certiorari and

affirmed. Because the broad and sweeping language set

forth in Alden bears directly on the issue at hand, the

Court believes it appropriate to quote extensively from

that decision. The Alden Court began its analysis as

follows:

The Eleventh Amendment makes explicit refer-

ence to the States’ immunity from suits

App. 67

“commenced or prosecuted against one of the

United States by Citizens of another State or by

Citizens or Subjects of any Foreign State.” ...

We have, as a result, sometimes referred to the

States’ immunity from suit as “Eleventh

Amendment immunity.” The phrase is convenient

shorthand but something of a misnomer, for the

sovereign immunity uf the States neither derives

from nor is limited by the terms of the Eleventh

amendment. Rather, as the Constitution’s struc-

ture, and its history, and the authoritative inter-

pretations by this Court make clear, the States’

immunity from suit is a fundamental aspect of

the sovereignty which the States enjoyed before

the ratification of the Constitution, and which

they retain today (either literally or by virtue of

their admission into the Union upon an equal

footing with the other States) except as altered

by the plan of the Convention or certain constitu-

tional Amendments. 7

Although the Constitution establishes a National

Government with broad, often plenary authority

over matters within its recognized competence,

the founding document “specifically recognizes

the States as sovereign entities.” ... Various tex-

tual provisions of the Constitution assume the

States’ continued existence and active participa-

tion in the fundamental processes of govern-

ance.... The limited and enumerated powers

granted to the Legislative, Executive, and Judi-

cial Branches of the National Government, more-

over, underscore the vital role reserved to the

States by the constitutional design.... Any

doubt regarding the constitutional role of the

States as sovereign entities is removed by the

Tenth Amendment which, like the other provi-

sions of the Bill of Rights, was enacted to allay

App. 68

lingering concerns about the extent of the na-

tional power. The Amendment confirms the

promise implicit in the original document: “The

powers not delegated to the United States by the

Constitution, nor prohibited by it to the States,

are reserved to the States respectively, or to the

people.”

The federal system established by our Constitu-

tion preserves the sovereign status of the States

in two ways. First, it reserves to them a substan-

tial portion of the Nation’s primary sovereignty,

together with the dignity and essential attributes

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