FEDERAL MARITIME COMMISSION v. SOUTH CAROLINA PORTS AUTHORITY
South Carolina Maritime Services, Inc. (Maritime Services), asked the South Carolina State Ports Authority (SCSPA) five times for permission to berth a cruise ship, the M/V Tropic Sea, at the SCSPA's port facilities in Charleston, South Carolina. Some cruises offered by Maritime Services would allow passengers to participate in gambling activities while on board. The SCSPA repeatedly denied Maritime Services' requests, contending that it had an established policy of denying berths in the Port of Charleston to vessels whose primary purpose was gambling. Maritime Services file a complaint with the Federal Maritime Commission (FMC), arguing that SCSPA violated the Shipping Act by its denials. The complaint was referred to an Administrative Law Judge (ALJ), who found that the SCSPA, as an arm of the State of South Carolina, was entitled to sovereign immunity and thus dismissed the complaint. Reversing on its own motion, the FMC concluded that state sovereign immunity covers proceedings before judicial tribunals, not Executive Branch agencies. In reversing, Court of Appeals fund that the proceedings were an adjudication and thus subject to state sovereign immunity.
Does a State's sovereign immunity preclude the Federal Maritime Commission from adjudicating a private party's complaint that a state-run port has violated the Shipping Act of 1984?
Legal provision: Amendment 11: Eleventh Amendment
Yes. In a 5-4 opinion delivered by Justice Clarence Thomas, the Court held that state sovereign immunity bars the FMC from adjudicating a private party's complaint against a nonconsenting State. Historically, the Court noted, states were not subject to private suits in administrative adjudications when the Constitution was adopted, and states were thus presumptively immune from such actions. Moreover, the Court pointed to the similarities between the FMC's proceedings and civil litigation to conclude that there was no basis for distinguishing between the actions for purposes of sovereign immunity. "Although the Framers likely did not envision the intrusion on state sovereignty at issue in today's case, we are nonetheless confident that it is contrary to their constitutional design," wrote Justice Thomas.
CHIEF JUSTICE REHNQUIST: We'll hear argument first this morning in Number 01-46, the Federal Maritime Commission v. the South Carolina State Ports Authority.
MR. PHILLIP C. HUGHEY: Thank you, Mr. Chief Justice, and may it please the Court:
The adjudication of a Shipping Act complaint by the Federal Maritime Commission is an administrative regulatory process through which the agency makes findings of fact and applies its interpretation of the Shipping Act to those findings of fact.
This is an exercise of executive power.
CHIEF JUSTTICE REHNQUIST: Well, why isn't that adjudication, if it applies the law to findings of fact?
MR. HUGHEY: Mr. Chief Justice, it is adjudication, but what we're suggesting is that it's not judicial. It is an executive branch adjudication that permits the agency to determine what position it would like to take with respect to potential violations of the Shipping Act.
CHIEF JUSTICE REHNQUIST: But doesn't it involve a decision as to whether this particular respondent before the commission has violated some provision of the act?
MR. HUGHEY: Yes, and in that sense, Your Honor, it is an exercise of ad hoc regulation. It's regulation on a specific and discrete set of facts.
CHIEF JUSTICE REHNQUIST: Well, you could say the same thing about a court, that it's not making an -- making an ad hoc regulation on these particular facts.
MR. HUGHEY: However, Your Honor, in the case of a court and a decision issued by a court, such an order would be self-executing, whereas a Federal Maritime Commission regulatory determination is not self-executing.
Rather, in the event that it's not voluntary compliance with whatever order the agency reaches at the end of an adjudication, the Attorney General or a private complainant must go into a Federal district court and seek to have that Federal district court compel compliance.
JUSTICE ANTONIN SCALIA: Suppose Congress --
JUSTICE SANDRA DAY O'CONNOR: Well, presumably a State would feel -- would hesitate not to appear because it might ultimately be enforced against the State by the Attorney General, isn't that right?
MR. HUGHEY: Yes, I think that is correct, Justice O'Connor, that a State might --
JUSTICE O'CONNOR: Well, if the State is compelled to participate, does that alter our analysis of it?
MR. HUGHEY: No, I don't think so, because the extent to which the State feels compelled by a potential action by the Attorney General of the United States is compulsion that arises from an action of the Federal Government itself in the name of the United States.
CHIEF JUSTICE REHNQUIST: What if a -- is a private plaintiff entitled to take a decision, or order, whatever you want to call it, of the commission, and seek to have it enforced by a court?
MR. HUGHEY: Yes, Your Honor, under the Shipping Act a private plaintiff is permitted to go into a Federal district court --
CHIEF JUSTICE REHNQUIST: And would the Eleventh Amendment defense raised by the State there prevail?
MR. HUGHEY: I think that that case would present a much more significant Eleventh Amendment issue. The Shipping Act provides that the district court hearing and, of course, an action brought by a private complainant must have jurisdiction of the parties.
I would suggest that to the extent there's any Eleventh Amendment interest that requires vindication under the Shipping Act, that vindication can be explored in the Federal district court proceeding.
JUSTICE RUTH BADER GINSBURG: Do you concede that at least as to reparation, where as I understand it the Government can go into the district court to seek reparations, only the private party, at least as to seeking dollars from the State agency, that the Eleventh Amendment would preclude that?
MR. HUGHEY: Well, in its order in this case, Justice Ginsburg, the commissioner finds that it would like to see its reparation orders deemed to be enforceable by a Federal district court, so I can't concede that they wouldn't be, but what I can say is that determination is not within the agency's jurisdiction. That would be a determination for the Federal district court to make in the event that the State instrumentality raised an Eleventh Amendment immunity defense to the attempted enforcement action by the private complainant.
JUSTICE SCALIA: Mr. Hughey, why do you assume that if this is not judicial action, sovereign immunity doesn't apply?
I mean, I guess whatever sovereign immunity the States retained upon the formation of the Federal Constitution was the sovereign immunity that existed in international law at the time.
Can foreign sovereigns be summoned before executive or legislative tribunals in this country?
MR. HUGHEY: I don't know whether foreign sovereigns can be summoned before the --
JUSTICE SCALIA: Well, but the State sovereign immunity is just what -- the sovereign immunity that they had at international law. That's what -- the Eleventh Amendment is just a reflection of the fact that they retained that sort of sovereign immunity, and I don't think it makes any difference that, you know, if the King of England summons George Washington, President of the United States, to appear before a parliamentary commission or some royal tribunal instead of an English court.
I think George Washington would say, you know, go fly a kite.
MR. HUGHEY: Well, I think that one can turn to the text of the Eleventh Amendment itself for some guidance on this issue, Justice Scalia.
JUSTICE SCALIA: No, you can't, because the Eleventh Amendment is just -- we have held that it represents just a reflection of the fact that the States retained that sovereign immunity that they had before the formation of the Federal Republic, and --
MR. HUGHEY: It's a reflection, Your Honor, of the immunity from coercive judicial process. I think that's why the Eleventh Amendment begins that the judicial power of the United States shall not be construed to any --
JUSTICE ANTHONY KENNEDY: That's the conclusion, but what Justice Scalia's asking, and I think we're interested in, is whether there's any precedent that you could cite, any historical source that says that an administrative tribunal can summon a sovereign before it and render a judgment.
MR. HUGHEY: Well, if I may suggest a different side to that is that there is no precedent to suggest that it can't. It's been held by this Court in California v. United States that State-run courts are subject to commission regulation.
JUSTICE KENNEDY: Well, but if it's the dog that didn't bark theory, it seems to me that cuts against you. If this has never been done, that's probably because it can't be done. At least we can make that inference.
MR. HUGHEY: No, I think it has been done since the Shipping Act was first passed, and it simply --
JUSTICE KENNEDY: I'm not talking about the Shipping Act. I'm talking about other authority. If you're saying that the Shipping Act is the precedent-breaking ground, it seems to me that you're then on somewhat a slender foundation for your argument here.
MR. HUGHEY: This Court held in California v. United States that the Shipping Act as a regulatory statute applies to all State-run courts. What the commission is suggesting, Justice Kennedy, is that that applies equally with respect to agency adjudications.
CHIEF JUSTICE REHNQUIST: But California v. United States, the United States was a party, so there was no Eleventh Amendment question there.
MR. HUGHEY: No, the question I think was whether the entire statute, which at that time included a regulatory procedure that could be initiated by private complainants, whether the entire statute, which was a coherent regulatory scheme, applied to State-run ports, and that's what the Court held. The Court specifically referred to the scheme for regulating waterfront terminals, not the specific provision within that scheme that permits the United States itself to initiate an investigation.
CHIEF JUSTICE REHNQUIST: But the case itself, United States v. California, raised no Eleventh Amendment problem.
MR. HUGHEY: No, that's correct. That's correct, it didn't raise an Eleventh Amendment problem, but the issue was whether the regulatory scheme as a whole could be applied to State instrumentalities, and this adjudicatory proceeding under the Shipping Act is part of that regulatory program.
With respect --
CHIEF JUSTICE REHNQUIST: Is there any -- I mean, it's sort of an interesting question, but I wonder if there are laws or rules which say that the Congress says that any ship, including ships belonging to foreign States that enter New York Harbor, will abide by the rules of the New York Harbor Authority, and if they don't, you can -- there's some argument about whether the pilot comes on or something, that ship, including a military ship of a foreign nation, or any other, has to adjudicate the controversy in front of the New York Authority or other -- I don't know how that works, but maybe you do. I imagine they are subject to our rules when they come here, and bring their ships into the harbor.
MR. HUGHEY: Yes, I would think so, and the commission does have some jurisdiction over foreign-operated and -- foreign operated vessels that are owned by sovereigns. The commission regulates sally-to-port controlled carriers which are vessels that are owned by Governments.
If a complaint were to be filed against such an entity, I see no reason why the commission would not attempt to assert its regulatory adjudicatory jurisdiction over such a complaint, but I know of no such specific case under the statute.
JUSTICE DAVID H. SOUTER: How do you get around the, sort of the principle of dignity which has been emphasized in every case, I think, since Seminole, and it's been given a prominent place in the reasoning of the court majority in those cases, that it's the dignity of the States, and so on, which must be preserved.
If under the rule of sovereign immunity which overarches the Eleventh Amendment there were indefeasible dignity interests in the adjudication, say, in Seminole and all of them, doesn't it follow, a fortiori, that there are dignitary interests that would be offended by hauling the State in front of an Article I, a purely administrative tribunal?
MR. HUGHEY: I think I would have two responses to that, Justice Souter. First is that I understand the dignitary interest to be co-extensive with the sovereign immunity interest, and second --
JUSTICE SOUTER: Well, that leaves the question in a -- unanswered, I guess. The --
JUSTICE SCALIA: Justice Souter says the sovereign immunity interest is co-extensive with the dignitary interest.
JUSTICE SOUTER: Let's assume the co-existence. What's the answer to the question?
MR. HUGHEY: Well, I think the answer would be, then, that sovereign immunity doesn't apply, that a State's dignity is not offended.
JUSTICE SOUTER: I certainly agree with you.
Because dignity seems to have been taken, in fact, as one of the interests to be served by sovereign immunity. Why doesn't the doctrine of sovereign immunity, why doesn't it apply if applied in those other cases?
MR. HUGHEY: Well, I think that the dignity of the State is less offended by this type of regulatory adjudication, given the fact that the agency has no coercive power to compel anything from the State.
JUSTICE SOUTER: I -- it seems to me intuitively just the opposite. I mean, these are tribunals that -- if we're going to talk about dignity, these are tribunals that do not have the dignity of the judicial forums that were at stake in the preceding cases, and I would have supposed that the offense to the sovereignty of the State was even greater to pull the State before these lesser tribunals.
MR. HUGHEY: Well, I think the offense to the dignity interest of the State occurs when a State is forced to do something which is the result of a coercive act. Under the Shipping Act --
JUSTICE SOUTER: Everything was fine in Seminole and all of them, until we got to the point of judgment? I mean, is that the way you're trying to cut the argument?
MR. HUGHEY: No. I think in cases like Alden and Seminole Tribe it was the threat of judgment that hung over the United States that was the problem, because in those cases, if the court entered an order against a State it was automatically self-enforcing them.
JUSTICE SCALIA: Well, they could have made them appear and just said, you know, we understand that -- just as you're saying, we understand that an order can't issue against you, but that doesn't mean you shouldn't show up.
We haven't said that in sovereign immunity. We've said the State does not have to appear. It is hauling the State before the tribunal that is the offense, not just the judgment.
MR. HUGHEY: Well, I think with respect to your hypothetical this Court has found the power of coercion or contempt is the judicial power necessary to the exercise of all others, so I don't think that a court could just tell a State, well, appear and we're not going to be able to issue an order against you.
I think the fact that coercion can result from the judicial proceeding is the point of the judicial proceeding and is what differentiates it from this type of regulatory adjudication.
JUSTICE SCALIA: Well, but the court can't say it, but the Eleventh Amendment says it. I mean, and whereupon the court can say, look, you know, by reason of your sovereign immunity, we understand if you show up we can't issue any contempt judgment, we can't issue a merits judgment against you, but that doesn't mean you don't have to show up. But it does mean you don't have to show up, doesn't it?
MR. HUGHEY: Well, yes, the State can move to dismiss any suit that's filed against it in a court, but I still think that it's the threat of coercive judgment against the State that is the reason that the State can --
JUSTICE SCALIA: There is no threat of coercive judgment. The Eleventh Amendment makes it very clear that you can't issue the coercive judgment, but the State still doesn't have to show up.
MR. HUGHEY: I don't think that analysis should apply to this statute, Justice Scalia, because under the Shipping Act the agency can -- cannot compel an appearance by the State.
If the State just doesn't show up under the Shipping Act, the only way to do anything about that is to go into a Federal district court and seek a court order, and if the agency determines to do that, it then has to ask the Attorney General to do so.
Under the statute, the Attorney General may, rather than shall, enforce any order the commission issued. That is therefore, by definition, an exercise of the executive discretion that this Court found acceptable in Alden v. Maine.
CHIEF JUSTICE REHNQUIST: Does the commission have contempt powers?
MR. HUGHEY: No. No, it does not.
CHIEF JUSTICE REHNQUIST: Well, if it issues its process to a State and the -- like the entity in the present case, and the entity simply fails to show up, what can it do?
MR. HUGHEY: If the entity failed to show up, Mr. Chief Justice, the commission could issue an order telling it to show up, but again, that would have to be enforced by a Federal district court, and if --
CHIEF JUSTICE REHNQUIST: At the behest of the Attorney General, or --
MR. HUGHEY: Yes. Yes. The commission would have to ask the Attorney General to enforce it. Under the statute the Attorney General doesn't have to, but if he determined to do so, he could then go into a district court and try to enforce the order.
CHIEF JUSTICE REHNQUIST: And what would be the Eleventh Amendment situation there, when the commission went into district court to try to enforce its order to require appearing?
MR. HUGHEY: Oh, I would suggest that there would be no Eleventh Amendment problem there, because the enforcement action would be in the name of and by the United States.
CHIEF JUSTICE REHNQUIST: It would be by the United States?
MR. HUGHEY: Yes. It would be in the name of and by the United States. In this case, it would be, for example, United States v. South Carolina State Ports Authority.
JUSTICE GINSBURG: How many agencies have a pattern like this, where they determine the rules by rule-making, this kind of adjudication, and a commission-initiated proceeding?
MR. HUGHEY: I know that the Surface Transportation Board, which used to be the NSA Commerce Commission, has this authority, and I think that the Federal Communication Commission does, but I'm not entirely certain of that.
I would suggest, if I may, that to uphold the State's claim of Eleventh Amendment immunity in this case will have an adverse effect on the regulatory scheme that the Congress has created in the Shipping Act by undermining the notion of national uniformity in maritime commercial regulations.
JUSTICE SCALIA: Well, Congress could certainly handle that by making it very clear by legislation that if the State runs one of these operations, the State waives its sovereign immunity. Couldn't Congress make that clear?
MR. HUGHEY: I'm not sure if that kind of waiver is still acceptable after this Court's opinions of recent years.
I would suggest that it's probably not, but we think that, under the statute as it's written now, there's no need for something like that, because it's merely a regulatory action that the commission is attempting to utilize to find facts to determine what constitutes a Shipping Act violation, and again, there's no use of coercive power. In order for there to be coercion, the commission has to go into a Federal district court.
If I could reserve the remainder of my time for rebuttal.
CHIEF JUSTICE REHNQUIST: Very well, Mr. Hughey.
Mr. Clement, we'll hear from you.
MR. PAUL D. CLEMENT: Mr. Chief Justice, and may it please the Court:
States enjoy no sovereign immunity from Federal executive branch action, even when it takes the form of adjudication. It is well-established that States have no immunity from a suit brought by the Federal Government.
That's true not because of some preexisting notion of sovereign immunity, but because that consent to suits by the United States Federal Government is implicit in the plan of the convention.
Now, proceedings before the Federal Maritime Commission are a necessary predicate for the United States Government to bring a Federal suit to enforce the Shipping Act.
Given that the States enjoy no immunity from such a suit, they should not be allowed to reach back into the administrative process and assert an immunity from the preliminary proceedings before the agency.
JUSTICE KENNEDY: But I'm not -- I don't understand the argument. Sovereign immunity is based on parties, and we have said that when the United States is a party, there's no sovereign immunity, and not, incidentally, because that was inconsistent with some earlier notion of sovereign immunity, because the Constitution changed it.
MR. CLEMENT: No --
JUSTICE KENNEDY: But here we have a private party. That's all -- isn't that all the difference in the world?
MR. CLEMENT: But we have a private party that's not initiating a lawsuit, but is initiating executive action. Private parties are free to complain to the Federal Government and say a State government is violating Federal law.
In fact, the Petition Clause rightly protects the individual petitioner's right to petition the Federal Government and complain about that violation.
Now, I don't think it violates the Constitution for the United States Federal Government to say, we take citizen complaints seriously, and we're going to investigate each and every one of them, and I wouldn't think that it would violate the Eleventh Amendment for the Attorney General to give the party who's the subject of the complaint, even if it's the State, an opportunity to come before --
CHIEF JUSTICE REHNQUIST: Yes, but --
MR. CLEMENT: -- the executive branch and explain why there wasn't a violation.
CHIEF JUSTICE REHNQUIST: But the commission isn't just like kind of an ombudsman here. I mean, it's got very definite procedures that greatly resemble adjudication.
MR. CLEMENT: Well, they do resemble adjudication, and that's part of the process to formalize and regularize this process of getting complaints from citizens and response from others, but I don't think the formalization and regularization of that process turns it into a judicial act. It remains an act --
JUSTICE SOUTER: Well, isn't it the case that if the State defaults and says, you have no jurisdiction over me, and the commission therefore comes to a conclusion -- we'll leave the word adjudication out of it. It comes to a conclusion.
That conclusion itself is enforceable as such, at the behest of the National Government, in a district court, isn't it?
MR. CLEMENT: Well, first I want to clarify something. If there's a case where the State doesn't appear, and the private party is asserting a view of the Shipping Act that's contrary to the view of the Federal Maritime Commission, then there will be no order.
JUSTICE SOUTER: Let's assume it's not contrary. Let's assume the Maritime Commission says, you, private party, are right, and we hold that the State has committed the following violations, and I presume should be enjoined from further commission, whatever order it might come up with.
Once the commission has come to such a conclusion, isn't that conclusion, as such, enforceable at the behest of the United States in the district court?
MR. CLEMENT: It is -- it would be enforceable through a judicial procedure under the Shipping Act.
JUSTICE SOUTER: So -- if that is so, there's something much more involved here than merely an agency of the National Government taking a complaint seriously and investigating it, and the difference is that in the -- under the act, its conclusion on the investigation becomes an enforceable order at the behest of the National Government in a district court, and isn't that the difference?
MR. CLEMENT: But I don't think it's a critical difference, because the reason that that becomes enforceable, subject to whatever defenses there are, the reason that becomes enforceable is not because it's the midway point in some litigation.
It's enforceable because it reflects the executive branch's definitive interpretation of the Shipping Act.
The cease-and-desist order --
JUSTICE SOUTER: Well, the Federal Government could have an interpretation of the Shipping Act and go into it -- assuming there is otherwise a statutory jurisdiction here, the National Government could have a view of the shipping Act and go into the district court and say, this is our considered view, and the other party would have an opportunity to oppose it. We'd have a lawsuit.
As things stand now, when the United States goes in with what you call its considered view, that is the end of the issue on the merits, as I understand it. The only thing the district court is there for is to enforce it.
MR. CLEMENT: Well, there are some challenges that can be brought to that, and I guess the problem with this --
JUSTICE SOUTER: Could they have a trial de novo on the merits?
MR. CLEMENT: No, they can't, under the current system.
JUSTICE SOUTER: Could they collaterally attack and say, look, it doesn't mean anything to us, because we can't be hauled in front of the commission by a private party. Can it -- is such a plea recognized?
MR. CLEMENT: I don't think it currently is, but if that's --
JUSTICE SOUTER: No, I don't think it is, either, and that's why your argument that this is nothing but a way for the National Government to take a considered view of a complaint and come to a conclusion seems to me beside the point.
MR. CLEMENT: Well, it -- but the point, I think -- first of all, if the problem is the level of review that's given at the end of the process, then that's what should be adjusted, not throwing out the entire proceeding ab initio as the Fourth Circuit did.
But more to the point, I think the reason there's deference is because it reflects the executive branch's view, and it's the same in that order whether it's the product of a privately initiated complaint and adjudication, or whether it's an agency-initiated complaint. In both cases there's going to be practical pressure for the State-regulated entity to participate in the proceeding, but neither should they get an immunity.
The practical pressure is not the same as the compulsive process that the judiciary has. Nobody's summoned before the commission because a summons is necessarily enforced through the contempt power of the court. This is --
JUSTICE KENNEDY: Well, Mr. Clement, when I began to read your brief and I sensed that the sky was falling, and so I was turning my pages to see all of the horrible things that were going to happen to the Federal scheme if the court of appeals judgment stood, and I didn't see much there.
There's the Vending Stand Act in one of the circuit courts, but do Federal agencies call Governors before them all the time and say, well now, Governor, you're not enforcing the Federal laws?
I don't see that as part of our constitutional tradition. I don't see that we would create a great revolution in traditional practice by pulling the Ninth Circuit.
MR. CLEMENT: What there is a tradition of is the executive branch having the flexibility to determine how it is going to enforce Federal law.
There aren't many of these cases precisely because there just aren't that many State-run entities that are regulated, but the executive branch has the flexibility to regulate them through rule-making, through agency-initiated adjudications, or through private adjudications.
In each one of those, there are practical pressures to participate. In each one of those, the rule-making can be initiated by a private complaint.
There's a specific provision in the commission's regulation to allow rule-makings to be kicked off by a private complaint, but that doesn't turn it into something other than the executive branch's determination of what the law is and how it should be enforced, and this Court has generally deferred to the executive branch's need to determine how best to take care that the laws are faithfully executed.
JUSTICE STEPEHN G. BREYER: What about the labor board?
MR. CLEMENT: What's that?
JUSTICE BREYER: What about the labor board, universities?
MR. CLEMENT: Well, --
JUSTICE BREYER: State universities and the labor board.
MR. CLEMENT: I don't know the specific application, but --
JUSTICE BREYER: No, but I'm thinking that the universities often have unions, and I gather that -- why hasn't the labor board been involved in adjudicating complaints about the State university as an employer in respect to the labor unions?
MR. CLEMENT: Well --
JUSTICE BREYER: Maybe it hasn't. I wouldn't know why it wouldn't have.
MR. CLEMENT: I mean, but one thing that's certainly clear about the labor board is that that's a perfect example of an administrative agency that decides to proceed by adjudication.
JUSTICE BREYER: I'm not arguing with you. I'm just wondering why there were not more examples.
MR. CLEMENT: Well, another example is the Railway Labor Act, because the Railway Labor Act is -- defines its jurisdiction coextensively with the Interstate Commerce Commission. There are State-run railroads under the Railway Labor Act.
Typically those kind of employment disputes are initiated by a private party. This court in California v. Taylor said that the Railway Labor Act can apply to a State-run railroad.
Interestingly, in footnote 16 of that opinion, the Court reserved the question of whether the Eleventh Amendment provided protection for the suit in court, but it didn't say anything about Eleventh Amendment protection before the board itself, and I think the relevant history here is almost exactly the opposite of the case in Alden.
In Alden, this case had a long history of State sovereign immunity, and very few and only recent efforts by the Federal Government to abrogate that immunity.
Here, by contrast, there's a 115-year tradition of State entities being subject to regulatory commissions, and very few and only recent efforts to invoke any kind of Eleventh Amendment immunity before them.
I also think that the text of the Eleventh Amendment has a special relevance here that it lacked in Alden.
In Alden, the determination that State courts not exercise the, quote, judicial power of the United States, only began the analysis of whether or not the States enjoyed their sovereign immunity free from congressional disturbance.
Here, the recognition that the commission exercise -- does not exercise the judicial power of the United States necessarily means it exercises the executive power of the United States, and this Court has traditionally held that the executive branch may initiate process against the States without an Eleventh Amendment bar.
The fact that this proceeding --
JUSTICE SOUTER: Well, it's not -- you keep speaking about an Eleventh Amendment bar. The bar is sovereign immunity. We're not concerned about the textual limitations about the Eleventh Amendment. We're concerned with sovereign immunity.
MR. CLEMENT: But in this particular context, I think the text is relevant, because this is not a free-floating, pre-existing notion of sovereign immunity.
What we're saying is that the Eleventh Amendment waiver in the plan of the Constitution that allows the United States Government to sue a State also allows it to take the preliminary steps in the administrative process.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Clement.
Mr. Dean, we'll hear from you.
MR. WARREN L. DEAN, JR.: Thank you, Mr. Chief Justice, and may it please the Court:
This case presents the question of whether sovereign immunity protects a State from a private suit brought before a Federal administrative tribunal.
We have heard today arguments and suggestions that this proceeding is not a suit within the meaning of the doctrine and principle of sovereign immunity.
In 1868, this Court addressed this question. It held in Nichols v. United States that a proceeding before an Article I administrative tribunal, a so-called legislative court, just like the Federal Maritime Commission, was a suit for sovereign immunity purposes.
The case was appealed from an appeals court.
The Court confirmed that legislative court status of the claims court twice, in Ex parte Bakelite in 1929, and then in Williams v. United States in 1933, and later in 1934 the court again, in United States v. Sherwood, unanimously confirmed both conclusions, that States -- that claims court was an Article I legislative court, and its jurisdiction was dependent upon a waiver of sovereign immunity. There were no dissenting justices in any single one of those decisions.
JUSTICE GINSBURG: Mr. Dean, but that was an Article I court that just adjudicates. Here we're being told that the Maritime Commission is in the business of making rules for the governance of people in the trade, and it makes the rules three ways.
One through rule-making, another's through commission proceeding, and a third through private complaints, and why couldn't the private complainant be regarded as a kind of delegate to the commission?
I take it if the commission itself decided to investigate, you would have no question about sovereign immunity, is that true?
MR. DEAN: We've made that clear throughout this proceeding, Justice.
JUSTICE GINSBURG: All right. So why can't the commission say, one of the ways that we investigate is, we listen to what private people tell us, so that in effect we're taking that private complaint and we're making it our own by processing it?
MR. DEAN: That's exactly -- that is exactly what does not happen in this case, Your Honor. A private complainant files a complaint before the Federal Maritime Commission, we receive the notice, we either respond or we're in default.
It is quite clear -- and I submit with all due respect that Mr. Clement is absolutely wrong on this. It is quite clear that the agency can find both findings of fact and findings of law against a nonresponding party.
That's been established administrative procedure law for sometime and, in fact, the private party controls the disposition of this proceeding.
The executive arm of the Federal Maritime Commission, its Bureau of Enforcement, does not even have a right to intervene in the proceeding. It has to petition like any other private party to get involved in the proceeding. They did not do that in this case.
JUSTICE KENNEDY: -- have standing?
JUSTICE GINSBURG: Can the private party ask --
MR. DEAN: They have to show cause for intervention, Justice Kennedy, just like any other private party would do. They have no greater standing than any other private party.
JUSTICE GINSBURG: But could a private party say to the commission, commission, here's a serious complaint, something wrong has been done, I don't have the resources to prosecute it, would you please investigate it?
MR. DEAN: Oh, absolutely. That's the way the commission traditionally does business. That is an entirely separate proceeding. That is the proceeding to which we would not object.
If a private party came into the commission and said, we have this grievance against the South Carolina State Port Authority and we'd like you to look into it, and the Bureau of Enforcement came to us and said, we think you're doing something wrong, we would obviously talk to them, and if we couldn't reach some kind of accommodation with respect to that matter, then we would -- and they brought a complaint against us, they would be entitled to do that if -- provided the complaint was brought in their names and formed by the United States.
And I might add that, in a reparations proceeding -- this is not a sanctionless exercise.
In a reparations proceeding, if the agency issues an order against us, a judgment against us, and we fail to comply with that judgment, we incur statutory liabilities, automatic, of up to $25,000 a day.
Now, they can be compromised by the agency for a period of 5 years after each violation, if it so chooses, but any time somebody says to me, for example, that if you don't do XYZ you're going to incur an automatic statutory liability of $25,000 a day, I consider that a sanction, and --
CHIEF JUSTICE REHNQUIST: Well, is that statutory liability, is that enforceable by the commission without court order, or did it have to go to court to do it?
MR. DEAN: Ultimately, if push comes to shove and there's a confrontation, they have to go to court, but Mr. Chief Justice, I think anybody faced with a statutory liability of the United States imposed by Federal law considers that a sanction, and we do not have the opportunity to protect our interests, to say, no, no, no, this wasn't a violation, this is what we did, when the agency, the only standard for the enforcement of the agency's order in court is whether or not it was duly and regularly issued.
So the position of the United States that this is not a -- that this is a proceeding that is essentially equivalent to a petition by a private party for executive action is absolutely incorrect, and they don't even believe that position themselves.
JUSTICE BREYER: Could I go back to your opening statement? Why is it an exercise of the judicial power of the United States? I mean, we have an ordinary administrative agency. What's the theory of it?
I mean, I grant you, I'm sure you're right, that there's some case that said once the court of claims, which is a court in exercising -- though set up under those Article I exercises the judicial power of the United States, so my Constitution says it has nothing to do with whether it's a lawsuit, not a lawsuit, I don't care. I want to know, is it the judicial power of the United States, and frankly, I didn't know that the executive branch could exercise the judicial power of the United States.
MR. DEAN: The court below held --
JUSTICE BREYER: Whatever they held, I want to know what the reasoning of it is.
MR. DEAN: Well, the reasoning -- the judicial -- you don't need to find the judicial power.
JUSTICE BREYER: You don't? My Constitution happens to say, the judicial power of the United States shall not be construed, so I'm -- maybe I don't have to find it, but I'd like to know on what basis I wouldn't have to.
MR. DEAN: This is a case brought by a citizen of the State of South Carolina, like Chisholm v. Georgia, I might add, against the -- against a -- the State of South Carolina. It's not technically for those terms and those terms alone within the scope of the Eleventh Amendment.
JUSTICE BREYER: All right, fine, it's not within the scope of the Eleventh Amendment.
MR. DEAN: It's Hans v. Louisiana.
JUSTICE BREYER: Oh, no, no, I want to know if it is with -- forget the fact -- I think it is within the scope of the Eleventh Amendment if a -- I believed, as far as I know, when a citizen of a State sues the State itself, of which he is a citizen, it is an interpretation of the Eleventh Amendment, and I didn't know that for that purpose you didn't have to find the judicial power of the United States, so I'm open to that argument.
MR. DEAN: Well --
JUSTICE BREYER: I want to know, is this the judicial power? If so, what's the argument? If it's not the judicial power, what part of the Constitution forbids it?
MR. DEAN: First, it is -- we have stated it is the judicial power, but you need not find that, and I'll give you the reason it is the judicial power of the United States, is because this agency acts as an adjunct to the court, just as this Court has held in Northern Pipeline and --
JUSTICE BREYER: Do all administrative --
JUSTICE JOHN PAUL STEVENS: Did you say it was the exercise of judicial power?
MR. DEAN: It is the exercise of -- the Shipping Act entails the exercise of judicial power, Justice Stevens.
You can look at this either as an organic analysis, as you have done under the Appointments Clause of the commission itself, or you can look at the statutory process and procedure that is involved.
JUSTICE BREYER: Does the Federal Trade Commission exercise the judicial power, does the State Department, does the Commerce Department, the Post Office -- I mean, what is the principle under which this is or is not?
MR. DEAN: Well, the --
JUSTICE BREYER: What about the President, let's say, when he's -- you see the point.
MR. DEAN: In your book, Justice Breyer, you call this an uneasy constitutional area, and I certainly agree with that.
The judicial power of the United States, this Court has held in a number of cases, including the cases that I just mentioned, that the judicial power can -- at least some component of the exercise of the judicial power in a comprehensive proceeding can be delegated to nonjudicial officers, provided it is subject to judicial supervision and subject to some specific supervisory parameters that exist in this case, but it's a complicated question, and the Court has disagreed on it, and various courts have disagreed on this question for sometime, and in fact, in some of the cases that I just mentioned, the United States Supreme Court took appellate jurisdiction from an Article I tribunal in the executive branch, and under those circumstances something was going on before the court of claims.
JUSTICE BREYER: You know, now that I can quote one of my favorite authors, Justice Scalia, he says it is no doubt true that all such administrative bodies adjudicate, they determine facts, apply a rule of law to those facts, and thus arrive at a decision --
MR. DEAN: Well --
JUSTICE BREYER: -- but there is nothing inherently judicial about adjudication.
MR. DEAN: Granted, but --
JUSTICE BREYER: Then what is it that makes it the judicial power?
MR. DEAN: What is it that makes it subject to sovereign immunity, or what is it that makes it the judicial power?
JUSTICE BREYER: The judicial power is what we're all -- and I'm --
MR. DEAN: Well, the judicial power, if you look at a proceeding, an administrative proceeding like the Shipping Act, and this Court held that, held this in the Far East Conference case, it said, you can't take one isolated aspect of it.
You cannot take the organic entity which is the Federal Maritime Commission and consider its functions independent of the rest of the proceeding that is involved.
Ultimately, this proceeding ultimately, in combination with the courts of the United States, this proceeding invokes the judicial power, whether the FMC is acting --
JUSTICE SCALIA: All executive action does. I mean, that's just too broad a principle. I mean, the fact is, since we don't have a -- we have a Constitution that has a Habeas Corpus Clause. There's nothing the executive can do to you that can't be challenged in court.
MR. DEAN: Well, this is --
JUSTICE SCALIA: Ultimately, the court is the moment of truth, but that doesn't convert every executive action into an exercise of the judicial power.
MR. DEAN: I know, but this is clearly not purely executive action. This is an independent agency, and this Court has held repeatedly that officers that exercise quasi-judicial power can be subject to special removal requirements, and that is --
JUSTICE SCALIA: Ah, so if this wasn't an independent agency, it would be different?
MR. DEAN: No, but let me -- both in Hensel and in Artistani, and in this Court's decision in West v. Gibson --
JUSTICE STEVENS: Would you -- may I just interrupt you? What if this were an executive agency, rather than an independent agency? Could you make the same argument?
MR. DEAN: Like -- the claims court was within the Department of Treasury at the time these decisions were handed down. That doesn't necessarily resolve the matter, but it does instruct the Court's analysis that this is a quasi-judicial independent agency --
JUSTICE STEVENS: Well, great, but that's not answering my question.
MR. DEAN: -- and its officers are not subject to executive supervision.
JUSTICE STEVENS: What is your answer to my question? If it were a pure executive agency, would it be the same case for you?
MR. DEAN: No. It would be the same case depending on the statutory process involved, Justice Stevens. The agencies --
JUSTICE STEVENS: In the statuary process, but clearly an executive agency within the Department of Commerce or Department of Agriculture, or something like that.
MR. DEAN: It was -- the court of claims was in the Department of Treasury at the time, and customs officials have done --
JUSTICE STEVENS: You're a little too fast for me.
MR. DEAN: I'm sorry.
JUSTICE STEVENS: What is your answer? Is it the same case entirely within the executive branch?
MR. DEAN: It is.
JUSTICE STEVENS: Okay.
JUSTICE SOUTER: Let me ask you a slightly different question. If we assume for the sake of argument that it is not the judicial power that's being exercised here, do you lose?
MR. DEAN: No.
JUSTICE SOUTER: Why don't you lose? Why don't you lose?
MR. DEAN: The court below said it was irrelevant.
JUSTICE SOUTER: Pardon me?
MR. DEAN: The court below said it was irrelevant, and I agree with that proposition.
JUSTICE SOUTER: And it's irrelevant because?
MR. DEAN: Because sovereign immunity --
JUSTICE SOUTER: Sovereign immunity -- in other words, you've got a sovereign immunity argument which is at least distinct from the Eleventh Amendment argument?
MR. DEAN: Absolutely.
JUSTICE SOUTER: Okay.
MR. DEAN: And the United States has a sovereign immunity argument, and they apply sovereign immunity --
JUSTICE SOUTER: That's what I thought.
MR. DEAN: The United States applies its sovereign immunity in proceedings just like this.
It has for all time. As a matter of fact, this Court has held sovereign immunity applies to the United States in administrative proceedings consistently for the last 130 years, and there has not been one single dissent from that proposition that I've been able to find.
In West, all the Justices of this Court assumed for the purposes of that analysis that sovereign immunity principles apply before the EEOC.
CHIEF JUSTICE REHNQUIST: Well, but sovereign immunity for the United States may not be co-extensive with sovereign immunity for the States.
Granted that sovereign immunity to the States goes beyond just the literal language of the Eleventh Amendment about the judicial power.
MR. DEAN: Mr. Chief Justice, I agree with that proposition in the abstract, but in this particular case, I think there's a lot of similarity, and I'll give you exactly -- I'll tell you exactly why I think why.
Firstly, the courts have held that it's a reciprocal -- this Court has held over the years that it is a reciprocal privilege, but the United States in its brief in this case --
JUSTICE SCALIA: Excuse me. What do you mean by that, that it's a reciprocal privilege?
MR. DEAN: Well, in Alden and in Hans and -- the Court has held that the privilege of Federal sovereign immunity -- State sovereign immunity is a reciprocal privilege to the privilege enjoyed by the States.
JUSTICE SCALIA: By reciprocal you mean that it's co-extensive?
MR. DEAN: Co-extensive mirror image, yes, Justice Scalia.
The United States has suggested in this case, and it's a proposition that I agree with, that the sovereign immunity of the United States at least as it applies to money judgments -- and it's much broader than money judgments, but let's just talk about money judgments for a minute, that at least as it applies to money judgments is informed by the Appropriations Clause, which reserves to the legislature, to the Congress the right to spend, and we all know the right to spend is the right to tax.
So our body politic, our -- the public -- the people of the United States have made a determination that their Constitution, which is their sovereign, commits to the legislative branches the exclusive right to expend the public's money, and that's a very fundamental principle in our Federal Constitution. That principle is also reflected word for word in this constitution of South Carolina --
JUSTICE STEVENS: Well, you don't think the States have --
MR. DEAN: Pardon me?
JUSTICE STEVENS: -- the exclusive right to determine when their money will be spent in a proceeding brought by the United States, do you?
MR. DEAN: Excuse me?
JUSTICE STEVENS: You don't say that the States have the same power over their own money that the United States has over its money, in an action brought by the United States?
MR. DEAN: I do.
JUSTICE STEVENS: There's sovereign immunity -- even in an action brought by the United States?
MR. DEAN: No, this Court has held that they have consented to suit, so it doesn't apply in that area.
JUSTICE STEVENS: So they don't have sovereign immunity in cases brought by the United States.
MR. DEAN: That's correct, but in this constitution of the State of South Carolina that was adopted 9 years before this Constitution was adopted, there is the same Appropriations Clause. The same principle is reflected, that no moneys may be obligated --
JUSTICE STEVENS: But that was before the Supremacy Clause was adopted in the Federal Constitution.
MR. DEAN: But this is a constitutional principle Justice Stevens. It is a question --
JUSTICE STEVENS: It is not a constitutional protection -- principle that protects the States from liability to the United States.
MR. DEAN: I ask you this question as a hypothetical. The Constitution of this --
CHIEF JUSTICE REHNQUIST: No, counsel doesn't ask questions.
MR. DEAN: I'm sorry, Mr. Chief Justice.
The constitution of -- I'll state it in a declaration. The constitution of the State of South Carolina reflects the same principle reflected in the Appropriations Clause.
We have two sister sovereigns, both of them organized on the same fundamental principle that only the people have the right to levy on the public treasury, and only the people through their elected representatives, and only the people have the right to spend, and therefore only the people have the right to tax.
JUSTICE GINSBURG: Mr. Dean --
MR. DEAN: Now, you have these two comparable constitutions. How do you [*41] put them together and violate that principle?
JUSTICE GINSBURG: Mr. Dean --
MR. DEAN: I don't know the answer to that question, Justice Stevens.
JUSTICE GINSBURG: -- you recognized a case called Ex parte Young, and let's say that the private complainant says, okay, I'm not going to sue the State court authorities.
I'm going to sue the commissioners, and so as the FMC to please substitute for the entity the individual commissioners, and they said go ahead, and they don't have sovereign -- individuals, at least with respect to prospective relief do not have sovereign immunity.
Why couldn't -- is that then just a matter of amending a complaint to name different parties?
MR. DEAN: That suit belongs in Federal court, and I doubt very seriously that the commission has that statutory jurisdiction. The reason is that it has jurisdiction over persons engaged in the business of operating, or internal operators.
I very sincerely doubt that any individual employee would satisfy that test, but the test certainly exists under Ex parte Young.
The opportunity might exist, except for the fact that the proper way for the individual to proceed in this particular case would be to file a declaratory judgment under State law, which is available, to obtain the relief the individual requested.
JUSTICE GINSBURG: But you haven't answered the question --
MR. DEAN: I'm sorry, Justice --
JUSTICE GINSBURG: -- why couldn't the FMC say --
MR. DEAN: I don't believe the Shipping Act gives the FMC jurisdiction over individuals who are employees of entities that are engaged in --
JUSTICE GINSBURG: Not employees, the commissioners themselves, the members of the State body.
MR. DEAN: The officers of the -- I don't believe the Shipping Act gives the FMC jurisdiction over officers of entities that it regulates. I don't believe it has that kind of personal jurisdiction, Your Honor.
That issue has not -- I am not aware that that issue has decided, but I frankly have grave doubts that it would.
JUSTICE GINSBURG: But if that matter were clarified so that Congress, wanting the FMC to have this third way of regulating said, in the case where State agencies are involved you can sue the individuals, individuals who compose the entity --
MR. DEAN: Well, the proper way for the Federal Maritime -- as I said, I don't think the FMC has that jurisdiction. It does have jurisdiction over us. All it has to do is initiate its own complaint.
When the ALJ dismissed the complaint in this case, he invited the commission, if the commission deemed the case had merit, satisfying the test in Alden, he invited the commission to initiate a proceeding through its own Enforcement Bureau.
The commission did not do so. Instead, they reversed the ALJ's order, which is in turn reversed by the Fourth Circuit.
The parties in this, the Federal parties in this case do not challenge the holdings of this case in Nichols, Hans, Sherwood, Alden, or Seminole, so in effect what they're asking this Court to decide is the following three propositions, and all of the following three propositions: that lesser tribunals established under Article I have powers that both State and Federal courts lack, even though they constitutionally may adjudicate only subject to the supervision of the latter;
2) that Congress, merely by assigning a private cause of action to administrative tribunal, acquires and exercises power it does not otherwise have to abrogate State sovereign immunity, thereby bypassing this Court's sovereign immunity jurisprudence, and 3) that States lack the reciprocal right to assert sovereign immunity in Federal fora where the immunity of the United States clearly applies.
CHIEF JUSTICE REHNQUIST: Well, you really don't need your third argument, do you, that the State sovereign immunity is co-extensive with Federal sovereign immunity?
MR. DEAN: I don't need that third argument, Mr. Chief Justice, that's quite correct, but what the United States asserts, says about administrative proceedings, if they were purely executive action -- for example, if it was purely an executive branch matter, this -- the United States has come into this Court on numerous occasions most recently in Artistani and West, and asked this Court to intervene in what they now say is a purely executive branch matter.
There was no inquiry. There was no special analysis that the court did to determine whether or not the intervention in that kind of purely executive branch matter was warranted. There was no discussion of that.
The court assumed that the doctrine of sovereign immunity as it applied to the Federal Government applied to it, and I might add that --
JUSTICE BREYER: Oh, what is the boundary? Apparently you're now talking about a principle of state sovereign immunity outside the scope of Amendment 11 of the United States Constitution, and I haven't really heard of that one.
I'm not saying it doesn't exist, but where do I go to discover what its bounds are, to discover what the implications are, to discover if it applies when the President does anything? I mean, I don't know what the scope of that one is, so where do I go to find out about that?
MR. DEAN: If the President does something and the President --
JUSTICE BREYER: No, I'm just asking -- my question is --
MR. DEAN: Hans -- Hans v. Louisiana is the only place you need to go.
JUSTICE BREYER: In other words, Hans you say is outside the scope of the Eleventh Amendment.
MR. DEAN: By its terms it held it was outside the scope of the Eleventh Amendment.
JUSTICE BREYER: All right, so Hans does not have to do with the Eleventh Amendment.
MR. DEAN: It does not by its terms have anything to do --
JUSTICE BREYER: Okay, it does not.
MR. DEAN: -- it reflects the --
JUSTICE BREYER: Then how do I discover the scope of this principle of State sovereign immunity outside the Eleventh Amendment?
MR. DEAN: Well, the same way you discover the principle of Federal sovereign immunity. You look at what the nature of the proceeding, and the nature of the affront to the dignity of the sovereign is being involved, you identify what the sovereign's interests are, and in this particular case, in the money judgment it violates the same clause of our constitution that it violates in the case of the Federal Constitution, and that's pretty persuasive.
JUSTICE STEVENS: But as I understand your argument, it's not limited to the reparations part of the case. There's --
MR. DEAN: No.
JUSTICE STEVENS: -- also a request for a cease and desist order.
MR. DEAN: Although I might add, Justice Stevens --
JUSTICE STEVENS: You don't really need the reparations for your position.
MR. DEAN: -- that the pure participation in this lengthy proceeding has had consequences for the Treasury of the State of South Carolina, but nonetheless, it's much broader than that, yes, Your Honor.
It goes to the nature -- as this Court held in Seminole, and I might add, when I was -- when we argued the case before the Fourth Circuit we had a little discussion about whether or not the State of South Carolina was willing to be a scofflaw.
In other words, whether we were willing to have our -- to have allegations, whether they be frivolous or serious, against us go unanswered in an administrative tribunal that concededly regulates us in Washington and have as the United States maintains this become a precedent that would affect their dealing with us in the future without defending ourselves, and that's simply not a realistic option for the State of South Carolina.
It's not a realistic option for anyone, much less a sovereign. If there's anything to dignity, there's a dignity to that, to be able to defend yourself against allegations and not have people who are decisionmakers make judgments against you --
JUSTICE STEVENS: But let me just --
MR. DEAN: -- based on unanswered allegations, or unanswerable allegations.
JUSTICE STEVENS: May I interrupt you for just a moment, please?
MR. DEAN: Justice Stevens.
JUSTICE STEVENS: Let's put the reparations to one side, and let's assume you're dead right on the monetary aspect of the case.
Is it your position that it would be in everyone's best interest to have proceedings like this initiated ex parte, and then the agency makes up its mind whether to go -- bring an enforcement proceeding, or it would be better to have a formal proceeding where you have a chance to respond to the charges and so forth?
MR. DEAN: No, it's far better, Justice Stevens, to have a person come to the agency, present its concerns to the agency, and the agency approach the State of South Carolina, one sovereign to another sovereign.
This case involves the regulation of gaming ships. The Congress has committed that to our discretion under State law. We are given that right.
The Johnson Act, which gave us the right to regulate gaming ships, does not say that it's subject to review by the Federal Maritime Commission. It does not say, for example that the Federal Maritime Commission --
JUSTICE STEVENS: No, but if you have --
MR. DEAN: -- has the right to preempt the Congress.
JUSTICE STEVENS: If you have an issue such as this in which the agency thinks there's a colorable basis for a proceeding, do you think the only way they can proceed against you formally is to first of all get all the information ex parte from the private parties, and then make up their own mind as to whether to bring a formal proceeding in the name of the agency?
MR. DEAN: Just like the Department of Justice does when it enforces the laws against the States, yes, Your Honor, that is the proper way of doing it, because we can and will address those allegations at that time, but I can assure you that the -- this case implements policies of the State of South Carolina that are important to it, the regulation of gaming ships, the Johnson Act Congress has said it's up to the State of South Carolina to make those policies and to implement those policies --
CHIEF JUSTICE REHNQUIST: Well, but the Johnson Act certainly didn't say that South Carolina was exempt from the requirement of the Shipping Act, that it not discriminate.
MR. DEAN: No, but I can -- that's correct, but in -- any regulatory system has at its core the right to make discretionary, discriminatory judgments about what does and does not comply with the policies of that regime.
CHIEF JUSTICE REHNQUIST: Well --
MR. DEAN: And the FMC is now sitting in judge -- as a judge of the -- of our implementation of State law as authorized by the Johnson Act.
CHIEF JUSTICE REHNQUIST: Well, certainly you're not suggesting that the Shipping Act in its prohibition against discrimination can't be applied to South Carolina other than on a sovereign immunity basis, are you?
MR. DEAN: No, we're not, but what we're saying is that if they exercise the executive discretion that they ought to act, that the Constitution envisions them enacting, that they would approach us as a sovereign, we'd say, these are our sovereign interests, they'd say, they are their sovereign interests --
CHIEF JUSTICE REHNQUIST: Well, yes, but --
MR. DEAN: -- ultimately they would trump ours, if there was a disagreement --
CHIEF JUSTICE REHNQUIST: Yes. In 1787 we adopted a Constitution so they didn't have to approach one another as sovereign to sovereign any more.
MR. DEAN: That's true, but in this particular area the Congress has decided that the sovereign State of South Carolina gets to do the regulating, Mr. Chief Justice, so we would come down and we would have two different regulatory regimes, and we would approach each other, and we would resolve the differences between them, and if they disagreed, if ultimately they disagree, they could bring a complaint against us, which they have the right to do, and we would defend it, and we would participate. We would have the opportunity to defend ourselves, and we would defend ourselves, and so that's --
JUSTICE KENNEDY: It would not be, perhaps, as intellectually satisfying as resolving the case specifically on the merits. Is it open to us to say that there's no clear statement that waives sovereign immunity, as we did in Vermont Yankee?
MR. DEAN: There is no statement that waives sovereign immunity. I think that's been conceded in the proceedings below. There's no waiver of sovereign immunity in this case. Yes, Your Honor.
JUSTICE KENNEDY: But there's no clear statement by the Congress of the United States intending abrogate --
MR. DEAN: Oh, no, clearly not. There's no mention in the Shipping Act at all of intention to waive State sovereign immunity.
I can't find a mention in the Shipping Act of intention to waive Federal sovereign immunity if and when the Federal Government ever wants to get into the business of operating ports.
It operates two airports in the Washington area, so I don't think it's inconceivable that it might do so at some point, but it is clearly -- it is clearly no waiver of sovereign immunity, even if -- even going back to the law where it said the Congress could waive the sovereign immunity of the United States, of the States, I'm sorry, there is no evidence of any intent whatsoever in the Shipping Act to do that.
The fact that the Federal Maritime Commission may bring its own actions against the United States -- against the States as it did in the California case proves the opposite proposition, that the Congress, that was the proper way to proceed, and I think that is the proper way to proceed.
The -- I'd like to go back to -- this complaint is a verified private complaint. It is -- calls for reparations in the broadest form of reparations, including consequential damages, interest and attorney's fees, the commission has no discretion in the handling of this complaint, it's required by law to adjudicate it, and the agency's findings become final subject only to judicial review.
This is precisely the kind of anomalous proceeding suit that the Court had in mind in Hans, and Hans came 30 years after --
JUSTICE KENNEDY: But only to the extent they're seeking a money judgment.
MR. DEAN: No, Your Honor, I think the sovereign immunity --
JUSTICE KENNEDY: Well, Hans was purely a money judgment.
MR. DEAN: Yes, but they held that the Court was -- they held the State immune from the proceeding.
Obviously, the proceeding had already been completed, but I think it's fairly clear now that the dignity of the sovereign entails to the entire proceeding, applies to the entire proceeding, but you know, this question about the dignity of the sovereign, the Court in Hans gave us some instructions, some future instructions --
JUSTICE BREYER: But Hans was a court case.
MR. DEAN: Hans is a court case.
JUSTICE BREYER: Well, I mean, it's not a case, then, in which they say it's not the judicial power --
MR. DEAN: Just like Federal sovereign immunity is a court case.
JUSTICE BREYER: And why is it a case in which they say -- isn't it -- I mean, I'm back on my judicial -- forget it, I'm sorry.
MR. DEAN: My time is up.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Dean.
MR. DEAN: Thank you, Mr. Chief Justice.
CHIEF JUSTICE REHNQUIST: Mr. Hughey, you have 3 minutes remaining.
MR. HUGHEY: If I could keep going with your inquiry, Justice Breyer, I think we are suggesting that there is a line in this case, and that line is Freytag v. Commissioner of Internal Revenue.
We're not suggesting that State instrumentalities would never have sovereign immunity in administrative proceedings. Rather, we're suggesting that they might in proceedings in which contempt power can be exercised, and this is not one such proceeding because the agency doesn't have coercive authority over the entities that it regulates. It has to rely on a Federal district court for that.
To make another point, I think Mr. Dean emphasized that the Shipping Act allows the agency to fine instrumentalities that don't comply with its order.
However, I should point out that in this case the commission has never indicated that it has the authority to fine a State instrumentality for not complying with a reparation order. That was something that ended up in the Fourth Circuit's opinion.
We've never said we could do it, and the United States in its reply brief to this Court has specifically expressed the view that the FMC could not fine a State-run court for not complying with the agency-issued reparation order.
And finally, with respect to the issue of whether and when the agency's Bureau of Enforcement can intervene in an agency proceeding,
I should point out that whether or not the Bureau of Enforcement intervenes in the adjudication does not get to the point of whether it is an agency action, because the agency always retains the ability to review, sua sponte, any administrative law judge order that comes out.
JUSTICE KENNEDY: Why is it that you cannot fine the State?
MR. HUGHEY: I think the United States has suggested that because the commission and the Attorney General don't have the authority to enforce a reparation order against a State, that the authority to fine the State for not complying with that reparation order would not be an appropriate interpretation of the Shipping Act.
Again, that's something, the commission has never said that it has the authority to, or that it would fine a State for not complying with an agency-issued reparation order.
JUSTICE GINSBURG: Could the commission substitute the commissioners of the South Carolina Ports Authority for the port authority itself?
MR. HUGHEY: I'm unsure of that, Justice Ginsburg, but we would suggest that the pleading requirements of Ex parte Young need not be imported into the Shipping Act, and that a request for, for example, a cease and desist order against the ports authority would, under the Shipping Act, be sufficient, and that the complaint need not name the commissioners of the ports authority themselves.
Thank you -- oh, sorry.
JUSITCE SCALIA: I think what Justice Ginsburg's question went to, you're saying you don't have to name the individuals, but suppose that we held that you couldn't name the State, do you think you have authority to name the individuals?
MR. HUGHEY: I'm unsure of that, Justice Scalia. The Shipping Act provides that complaints must be filed against persons. I think the question would be rather whether the port commissioners are persons.
It may be that a fiction could be conceived that they would be under the Shipping Act, but again, that issue has never come up in the commission's administration of the statute.
CHIEF JUSTICE REHNQUIST: Thank you, Mr. Hughey. The case is submitted.
Argument of Speaker
Mr. Clement: The opinion of the Court in No. 01-46 Federal Maritime Commission versus South Carolina State Ports Authority will be announced by Justice Thomas.
Argument of Justice Thomas
Mr. Thomas: This case comes to us on a writ of certiorari to the United States Court of Appeals for the Fourth Circuit.
South Carolina Maritime Services Inc. filed a complaint with petition of Federal Maritime Commission aleging that respondent, South Carolina State Ports Authority had violated the shipping act by refusing to provide Maritime services cruise ship to Tropic Sea, berthing space at respondent's port facilities in Charleston, South Carolina.
After Maritime Services complaint was referred to an administrative law judge, respondent filed a motion to dismiss arguing that States sovereign immunity barred the Commission from adjudicating Maritime Services complaint.
The administrative law judge agreed but the Commission decided on its motion to review the administrative law judge's ruling and reversed, reasoning that the doctrine of State sovreign immunity was not meant to cover adjudicative proceedings before administrative agencies such as the Commission.
Respondent then filed a petition for review and the Court of Appeals reversed the Commission's determination holding that sovreign immunity precluded the Commission from adjudicating Maritime Services complaint.
In an opinion filed with the Clerk today, we affirmed the judgment of the Court of Appeals.
We have previously observed that the central purpose of State sovreign immunity is to accord states to dignity that is consistent with their status as sovreign entities, and if the Framers thought it an impermissible affront to a State's dignity to be required to answer the complaint of private parties in federal courts, we cannot imagine that would have found it acceptable to compel a State to do exactly the same thing before the administrative tribunal of a federal agency.
A review of the rules governing the Commission's judicative proceedings reveals that the similarities between such proceedings and civil litigation in Federal Courts are overwhelming.
The affront to a State's dignity does not lessen when an adjudication takes place in an administrative tribunal as opposed to an Article III Court.
In both instances, a State is required to defend itself in an adversarial proceeding against a private party before an impartial federal officer.
Moreover, because Congress is prohibited from exercising its Article I powers to abrogate State sovreign immunity in Article III judicial proceedings, it would be quite strange if Congress were allowed to use those same Article I powers to create Court like administrative tribunals where sovreign immunity would not apply.
Justices Stevens and Breyer have filed dissenting opinions.
Argument of Justice Breyer
Mr. Breyer: Justice Stevens, Justice Souter, Justice Ginsburg and I dissent.
We have dissented frequently from the Court's interpretation of the constitution's structural prohibitions, those involving sovreign immunity, the Eleventh Amendment, the commoners clause in Section 5 of the Fourteenth Amendment.
Today's case indicates why we continue to do so.
The case involves an ordinary independent executive branch agency which seeks through ordinary agency adjudicated proceeding to determine, at the request of a private party, whether a State instrumentality or court authority has violated a federal statute.
The majority finds in the agencies use of adjudication, a constitutional analogy to other proceedings, court proceeding which the Eleventh Amendment, for example, says that a private party cannot bring against the State, but constitutionally speaking, we think that analogy is inadequate.
Agency adjudication differs in detail from Court adjudication, that is why we call agency adjudication quasi adjudicative.
The agency cannot enforce the law itself but has to go to Court in the name of the United States to do so.
The proceedings take place in the Executive Branch of Government, not the Judicial Branch which is subject to the Eleventh Amendment and one confined other at least equally compelling, I would say more compelling, constitutional analogies that work just the other way, for example in a private citizen's First Amendment right to ask the Government including the Executive Branch of Government to readress a grievance including a grievance against the State.
Where then does the majority find its contitutional prohibition?
Not in the constitution's text which it concedes there is not a word about.
Not in history, not in tradition, rather the majority appeals to the constitution's federalism related purposes, purposes embodied in such non-textual phrases as State dignity, plan of the convention, system of federalism.
These phrases of course are highly abstract and compared to other general constitutional phrases, words like liberty or due process of law, they suffer from the disadvantage that they do not actually appear in the constitution.
Regardless, why does one, a private citizen's complaint to an administrative agency asking has the State violated the law followed by an agency adjudication, why does that upfront a State's dignity any more then; two, the identical complaint made to the identical agency followed by agency rule making; or three, the identical complaint made to Congress followed by congressional hearings in enactment of a law.
The only answer to these questions that I can find in the court's opinion lies in the "great significance" -- and those are the court's words that the court attaches to the absence in the 18th century of 20th century administrative agencies.
An absence that I find hardly surprising.
In taking this approach in the court's readiness to find in silences, in 18th century absences, in broad interpretation, in formal reasoning from highly abstract nontextual concepts.
In finding that way of prohibition that forbids other branches of the Federal Government from acting.
In taking that approach, the Court risks departing from a constitutional understanding that it is held for more than 60 years, that the constitution forbids an overly restrictive judicial interpretation of its structural constraints, an interpretation that denies the Legislative in Executive Branches, the flexibility they need to deal effectively with modern, social, technological, and commercial problem.
An interpretation that impedes the constitution's basic effort to create democratic government that can translate the people's will into effective public action.
Indeed, the majority's holding today may well impede the Federal Government as it seeks to enforce against State employers laws designed to protect worker health and safety, as it seeks to enforce against State hospital's legal procedures designed to protect patients, as it seeks to enforce against State commercial or port authority's laws and procedures designed to protect commerce or for that matter as Justice Stevens pointed out in the Prince case, to protect national security.
At the same time, the majority's holding may require the building of larger federal bureaucracy.
Quite the opposite of the decentralizing purposes of the constitutional principles that it seeks to implement.
For these reasons and for others discussed in the opinion, in my dissenting opinion, unless and until the consequences of the Court's approach prove anodyne as I hope, rather than randomly destructive, as I fear, I shall continue to dissent.