How wide is states' shield from lawsuits?

A gambling ship sails into Supreme Court in latest test of federal-state power balance.

A dispute over whether a gambling ship should have access to the dock at Charleston's port has mushroomed into the latest constitutional showdown at the US Supreme Court over the balance of power between the states and the federal government.

At issue in the case set for oral argument today, is whether federal regulatory agencies have the authority to adjudicate complaints filed by private individuals alleging violations of federal law by states.

After the state port authority denied access to the gambling ship, the ship's owner, a private company, asked the federal government to overturn the decision.

What the Supreme Court must decide is whether 11th-Amendment sovereign immunity protects the state's decision from federal second-guessing.

In recent years the conservative wing of the high court under Chief Justice William Rehnquist has sought to restore what it views as the proper balance between state and federal authority. The justices have issued a series of rulings upholding state sovereign immunity and thus blocking attempts by Congress to empower private parties to sue states in both federal and state courts.

Administrative actions

The Charleston case takes the question one step further, exploring whether state sovereign immunity also extends to administrative actions before federal regulatory agencies that have been initiated by private parties.

While the case is not viewed as a potential turning point in the Rehnquist court's emerging federalism jurisprudence, it is being closely watched as an indication of how far the high court is prepared to extend its states' rights push.

"This is sort of a clean up operation," says Michael Greve, director of the federalism project at the American Enterprise Institute in Washington. "I think that on the sovereign immunity question itself everyone has dug in their heels. There is just no going back on it."

The Charleston dispute began in 1998 when the South Carolina State Ports Authority refused the gambling ship access to the dock, citing state opposition to gambling.

The company filed a complaint with the Federal Maritime Commission, claiming that the port authority was discriminating against it in violation of US shipping laws. The complaint seeks money damages and an injunction ordering the port authority to provide dock space.

The port authority countered that its decisions are covered by sovereign immunity.

An administrative law judge agreed and threw out the complaint. The commission reversed the judge. But the Fourth US Circuit Court of Appeals in Richmond reversed the commission.

"Sovereign immunity is not some outdated concept," wrote Chief Judge J. Harvie Wilkinson in the appeals court decision. "Sovereign immunity applies to proceedings brought in any forum by a private party against a nonconsenting state."

Judge Wilkinson added, "The history, the text, and the structure of the Constitution confirm that under its Article I powers, Congress cannot authorize private parties to haul unconsenting states before the adjudicative apparatus of federal agencies and commissions."

The appeals court decision is important because the 11th Amendment talks of immunity from the power of federal courts and federal lawsuits. It does not specifically refer to actions by federal regulatory agencies. But the Fourth Circuit ruled that they were covered as well.

Legal analysts say the case may turn on whether a majority of justices view the commission's work as equivalent to that of a judge.

"At one level it strikes me as right to say that sovereign immunity has to extend beyond (federal) courts to federal agencies that function like courts," says Mr. Greve. "The flip side of that is that it cannot possibly be right that every time a federal agency proceeds through adjudication the states can pipe up and invoke sovereign immunity."

Richard Seamon, a visiting law professor at Washington and Lee Law School, says the Charleston case could provide Congress with the means to complete an end-run around the high court's newly established sovereign immunity doctrine.

If the justices find the 11th Amendment does not cover regulatory agencies, he says, Congress might attempt to use federal agencies as a means to hold states accountable, against their will, to federal laws.

"A decision in favor of the federal government could open up a loophole that Congress may take advantage of in a big way," Mr. Seamon says.

Phillip Christopher Hughey, who is arguing the case for the Federal Maritime Commission, disagrees. Congress is barred from transferring federal court powers to administrative agencies, he says. And such action would violate well-established constitutional principles, Mr. Hughey says.

Equal standards

"The bottom line is, we just want ports to be subject to the same regulatory standards," says Hughey. "There is no attempt (by the commission) to co-opt any state instrumentality or exercise of authority, rather it is just an attempt to get the states in their commercial capacity to act like other commercial entities," he says.

A decision in the case is expected by late June.

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