Los Alamos School Bd. v. Wugalter, 75-2000

• Decision Date: 27 July 1977
• Docket Number: No. 75-2000,75-2000
• Parties: LOS ALAMOS SCHOOL BOARD, Plaintiff-Appellee, v. Harry WUGALTER, Chief of the Public School Finance Division of the Department of Finance and Administration, Vince Montoya, Director of the Department of Finance and Administration, Leonard J. Delayo, Superintendent of Public Instruction of the State of New Mexico, Jesse D. Kornegay, State Treasurer of the State of New Mexico, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 709

557 F.2d 709

LOS ALAMOS SCHOOL BOARD, Plaintiff-Appellee, v. Harry WUGALTER, Chief of the Public School Finance Division

of the Department of Finance and Administration, Vince

Montoya, Director of the Department of Finance and

Administration, Leonard J. Delayo, Superintendent of Public

Instruction of the State of New Mexico, Jesse D. Kornegay,

State Treasurer of the State of New Mexico, Defendants-Appellants.

No. 75-2000.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted Nov. 16, 1976.

Decided May 31, 1977.

Rehearing Denied July 27, 1977.

Jeff Bingaman of Campbell & Bingaman, Santa Fe, N. M., for appellants.

Richard C. Minzner of Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N. M., (on the brief Robert L. Schwartz, Albuquerque, N. M.), for appellee.

Before LEWIS, Chief Judge and BARRETT and DOYLE, Circuit Judges.

LEWIS, Chief Judge.

Plaintiff school board brought this action in United States District Court for the District of New Mexico challenging one subsection of the New Mexico Public School Finance Act ¹ on the ground it conflicts with the Atomic Energy Community Act of 1955 ("AECA"), 42 U.S.C. §§ 2301-94, and is therefore unconstitutional under the supremacy clause, U.S. Const. art. VI, cl. 2. The defendants are the responsible New Mexico education officials. The district court entered judgment for plaintiff declaring subsection 19(G) unconstitutional and ordering defendants to fund the school district under the general funding formula applicable to all other school districts.

Los Alamos, New Mexico, was originally established by the federal government as one of three federally-owned communities to house employees and their families who were involved in atomic energy research. In 1955 Congress approved legislation, the AECA, providing for the gradual termination of government ownership and management of two of these communities, Oak Ridge, Tennessee, and Richland, Washington. Los Alamos was included in this legislation in 1962.

The federal government transferred without cost the public schools it had built to the newly-created Los Alamos School District. The federal government originally through the Atomic Energy Commission and now through the Energy Research and Development Administration (ERDA), however, continued to make assistance payments to the school district pursuant to 42 U.S.C. §§ 2391-94. These payments to the school district have averaged more than two million dollars annually. In 1974 the school district received more than $2.4 million from the federal government in AECA funds.

Prior to 1974 New Mexico gave money to local school districts including Los Alamos to assist them in financing public education. Under this plan Los Alamos received about.$2.3 million from the state for the 1973-74 school year. In 1974 the Public School Finance Act was amended in an attempt to equalize educational expenditures and opportunities state-wide. This general "equalization funding formula" is now codified in N.M. Stat. Ann. §§ 77-6-19(A)-(F) (Supp.1975). ² This general formula applies to every school district in the state except Los Alamos. Los Alamos receives state funds for education under subsection 19(G) expressly because it receives education funds from ERDA under the AECA. ³

In exhibits presented to the district court, it was estimated the Los Alamos School District would receive more than.$2.3 million from the state for the 1974-75 school year under subsection 19(G). Under the general funding formula applicable to all other school districts Los Alamos would have been entitled to approximately $2.8 million during the same period. It was also projected that Los Alamos would receive more than.$2.5 million in state funding for 1975-76 under subsection 19(G), which is $475,000 less than it would receive if the general funding formula applied to Los Alamos.

The general funding formula determines the level of state funding by calculating each school district's basic program cost and subtracting 95 percent of the school district's local and certain specified federal revenues. Subsection 19(G) provides Los Alamos would receive an increase in state funding to match increased enrollment for the 1974-75 school year and additional increases in subsequent years to match both increases in enrollment and program costs.

The statutory scheme provides that if Los Alamos received no AECA funds for education in a given year then it would come within the general funding formula. Thus Los Alamos is singled out for special treatment merely because it receives AECA funds.

Los Alamos is unquestionably the wealthiest school district in the state. Among school districts of comparable size Los Alamos was ranked first in the state in operational revenue per pupil, in expenditures per pupil, in average teacher salary, in lowest pupil/teacher ratio, in lowest pupil/adult ratio, and in summer school and after school expenditures per pupil. Los Alamos has developed this superior and expensive educational program through the infusion of millions of dollars in AECA funds. ⁴

Since Los Alamos does not contend New Mexico has denied it equal protection by singling it out for special treatment, it is unnecessary to mention the reasons and justifications New Mexico advances for the special treatment. Instead, Los Alamos argues subsection 19(G) is unconstitutional under the supremacy clause because it conflicts with the AECA. The district court entered a judgment for plaintiff declaring subsection 19(G) unconstitutional and ordering defendants to give state educational funds to the Los Alamos School District under the general funding formula applicable to all other school districts. Defendants appeal this judgment. The only issue confronting us is whether Congress in adopting the AECA intended to prohibit New Mexico from funding Los Alamos in a different manner from other school districts solely because it receives educational funds under the AECA.

The supremacy clause provides the " . . . Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land . . . ." U.S.Const. art. VI, cl. 2. It establishes as a principle of our federalism that state and local laws are not enforceable if they impinge upon an exclusive federal domain. This impermissible impingement is diversely described as "preemption" and "conflict." The application of those terms means the state or local government has attempted to exercise power which it does not possess because of an express or implied denial of that authority in the Constitution or valid federal laws and regulations promulgated thereunder. See Northern States Power Co. v. Minnesota, 8 Cir., 447 F.2d 1143, 1146, aff'd, 405 U.S. 1035, 92 S.Ct. 1307, 31 L.Ed.2d 576. Compare Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248, and Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 67 S.Ct. 1146, 91 L.Ed. 1447, with Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233.

Plaintiff contends subsection 19(G) conflicts with the AECA. In order to reach our determination of this issue, we review the leading cases of Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581, and Perez v. Campbell, supra. In Hines, the Supreme Court was confronted with an alleged conflict between the Pennsylvania Alien Registration Act of 1939 and the Federal Alien Registration Act of 1940. The Court ultimately held the federal act formed a comprehensive integrated scheme for the regulation of aliens and precluded the enforcement of state alien registration acts such as that adopted by Pennsylvania. In so holding, the Court had to make a determination of "whether, under the circumstances of this particular case, Pennsylvania's law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." 312 U.S. at 67, 61 S.Ct. at 404.

This language is instructive in two respects. First, the Court uses the language "in this particular case" indicating these matters must be decided on a case by case basis. The Court makes this clearer by saying "(t)here is not . . . any rigid formula or rule which can be used as a universal pattern to determine the meaning and purpose of every act of Congress." Id. at 67, 61 S.Ct. at 404. Second, it indicates there must be an inquiry into congressional purpose and objective and a comparison with the state law purpose and objective. In making such a comparison in Hines, the Court says "where the federal government, in the exercise of its superior authority in this field, has enacted a complete scheme of regulation . . . states cannot, inconsistently with the purpose of Congress, conflict or interfere with, curtail or complement, the federal law or enforce additional or auxiliary regulations." Id. at 66-67, 61 S.Ct. at 404.

At first blush, this is strong, confining language. "(I)nconsistently with the purpose of Congress," however, seems to be somewhat of a qualifying phrase indicating that in some cases where the state and federal purposes are not necessarily inconsistent, certain conflicts between state and federal law will not necessarily render the state law invalid. It should be noted Hines offers no absolute test. The Court points out there is no "infallible constitutional test or an exclusive constitutional yardstick." Id. at 67, 61 S.Ct. at 404.

Perez interpreted Hines as establishing a "controlling principle that any state legislation which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause." 402 U.S. at 652, 91 S.Ct. at 1712. In Perez the Court held Arizona's Motor Vehicle Safety Responsibility Act conflicted with section 17 of the Bankruptcy Act, 11 U.S.C. § 35, which says a discharge in bankruptcy discharges all but certain specified judgments. The state statute called for the suspension of the license of a driver who was involved in an automobile...