City of Hugo v. Nichols

• Decision Date: 07 September 2011
• Docket Number: 10–7044.,Nos. 10–7043,s. 10–7043
• Citation: 656 F.3d 1251
• Parties: CITY OF HUGO, an Oklahoma municipality; Hugo Municipal Authority, an Oklahoma Public Water Trust for the benefit of the City of Hugo, Oklahoma, Plaintiffs,v.Jess Mark NICHOLS; Rudolf John Herrmann; Ed Fite; Ford Drummond; Jack W. Keeley; Kenneth W. Knowles; Linda Lambert; Lonnie Farmer; Richard Sevenoaks, in their official capacity as members of the Oklahoma Water Resources Board and the Oklahoma Water Conservation Storage Commission, Defendants–Appellees,City of Irving, Intervenor–Appellant.City of Hugo, an Oklahoma municipality; Hugo Municipal Authority, an Oklahoma Public Water Trust for the benefit of the City of Hugo, Oklahoma, Plaintiffs–Appellants,v.Jess Mark Nichols; Rudolf John Herrmann; Ed Fite; Ford Drummond; Jack W. Keeley; Kenneth W. Knowles; Linda Lambert; Lonnie Farmer; Richard Sevenoaks, in their official capacity as members of the Oklahoma Water Resources Board and the Oklahoma Water Conservation Storage Commission, Defendants–Appellees,City of Irving, Intervenor.
• Court: U.S. Court of Appeals — Tenth Circuit

656 F.3d 1251

CITY OF HUGO, an Oklahoma municipality; Hugo Municipal Authority, an Oklahoma Public Water Trust for the benefit of the City of Hugo, Oklahoma, Plaintiffs,

v.Jess Mark NICHOLS; Rudolf John Herrmann; Ed Fite; Ford Drummond; Jack W. Keeley; Kenneth W. Knowles; Linda Lambert; Lonnie Farmer; Richard Sevenoaks, in their official capacity as members of the Oklahoma Water Resources Board and the Oklahoma Water Conservation Storage Commission, Defendants–Appellees,City of Irving, Intervenor–Appellant.City of Hugo, an Oklahoma municipality; Hugo Municipal Authority, an Oklahoma Public Water Trust for the benefit of the City of Hugo, Oklahoma, Plaintiffs–Appellants,

v.Jess Mark Nichols; Rudolf John Herrmann; Ed Fite; Ford Drummond; Jack W. Keeley; Kenneth W. Knowles; Linda Lambert; Lonnie Farmer; Richard Sevenoaks, in their official capacity as members of the Oklahoma Water Resources Board and the Oklahoma Water Conservation Storage Commission, Defendants–Appellees,City of Irving, Intervenor.

Nos. 10–7043

10–7044.

United States Court of Appeals, Tenth Circuit.

Sept. 7, 2011.

Douglas G. Caroom, Bickerstaff Heath Delgado Acosta LLP, Austin, TX (Dale E. Cottingham and Patrick R. Wyrick, GableGotwals, Oklahoma City, OK; Susan M. Maxwell, Bickerstaff Heath Delgado Acosta LLP, Austin, TX, with him on the briefs), for Intervenor–Appellant and Plaintiffs–Appellants.Charles T. DuMars, Law & Resource Planning Associates, P.C., Albuquerque, NM (M. Daniel Weitman, Assistant Attorney General, Oklahoma Attorney General's Office, Oklahoma City, OK; Stephen Curtice, Law & Resource Planning Associates, P.C., Albuquerque, NM, with him on the briefs), for Defendants–Appellees.Before MURPHY, GORSUCH, and MATHESON, Circuit Judges.MURPHY, Circuit Judge.I. Introduction

The City of Hugo, Oklahoma, and the Hugo Municipal Authority, a public water trust, (collectively “Hugo”) have contracted with the City of Irving, Texas, (“Irving”) for the sale of water Hugo has been or seeks to be allocated under permits issued by the Oklahoma Water Resources Board (“Board”). Hugo and Irving brought suit against the nine members of the Board for a declaration that certain Oklahoma laws governing the Board's water allocation decisions are unconstitutional under the dormant Commerce Clause and an injunction prohibiting their enforcement. The district court granted summary judgment for the Board, and Hugo and Irving appealed. As explained below, Hugo, a political subdivision of Oklahoma, lacks standing to sue the Board under the dormant Commerce Clause. Irving, whose injury is solely premised on a contract it entered into with Hugo, likewise cannot demonstrate standing because any injury to Irving cannot be redressed. Concluding no plaintiff has necessary standing, this court VACATES the district court's order and REMANDS the case to the district court to dismiss for lack of federal jurisdiction.

II. Background

The Board oversees Oklahoma's permitting process for appropriating water within the state. Okla. Stat. tit. 82, § 105.9. Hugo, a longstanding holder of two permits issued by the Board, contracted to sell water to Irving for use in Texas. In conjunction with that agreement, Hugo applied for a third permit to appropriate additional water and, later, sought to modify its two existing permits to include Irving as a place of use.¹

Before the Board acted on its application for a third permit, Hugo filed suit seeking a declaratory judgment that certain Oklahoma laws ² governing the permitting process are unconstitutional under the dormant Commerce Clause, and an injunction preventing the Board from applying those provisions to Hugo's applications. In essence, Hugo asserted these laws discriminate against permit applications seeking to appropriate water for out-of-state use, thereby impermissibly burdening interstate commerce. Irving intervened as a plaintiff alleging the same constitutional claims. The district court granted summary judgment for the Board on the dormant Commerce Clause claim, concluding that the Red River Compact, a water compact ratified by Congress, authorized Oklahoma to enact the challenged laws. Accordingly, the district court did not reach the question whether the statutes would violate the dormant Commerce Clause absent congressional authorization. Hugo and Irving filed the instant appeal.

III. Discussion

Under the doctrine of political subdivision standing, federal courts lack jurisdiction over certain controversies between political subdivisions and their parent states. Branson Sch. Dist. RE–82 v. Romer, 161 F.3d 619, 628 (10th Cir.1998).³ On appeal, as below, no party raised the issue whether Hugo has standing ⁴ to sue the Board under the dormant Commerce Clause or whether, if Hugo lacks standing, Irving has standing premised on its contract with Hugo. This court has an independent obligation to assess its own jurisdiction. Thomas v. Metro. Life Ins. Co., 631 F.3d 1153, 1158–59 (10th Cir.2011). The standing requirements rooted in Article III apply equally on appeal as they do in the district court. Id. at 1159. Accordingly, this court ordered the parties to submit supplemental briefs addressing whether either appellant has standing. The analysis begins with Hugo.

A. Hugo's Standing

1. Analysis

The political subdivision standing doctrine dates back at least as far as the Supreme Court's decision in City of Trenton v. New Jersey, which concerned the city's challenge, brought under the Contract and Due Process Clauses, to its parent state's imposition of a fee for diverting water. 262 U.S. 182, 183–84, 43 S.Ct. 534, 67 L.Ed. 937 (1923). The city had previously purchased water rights from a private company and claimed the state tax effected an uncompensated taking of its property and interfered with its contractual rights to the water. Id. at 184–85, 43 S.Ct. 534. Rejecting the city's claim, the Court explained that political subdivisions are created by the state merely for convenience of administration. Id. at 185–86, 43 S.Ct. 534. The state, therefore, may delegate the function of public utilities, including the provision of water, to its political subdivisions, but the extent of that delegation “rests in the absolute discretion of the state.” Id. at 186, 43 S.Ct. 534 (quotation omitted). The city lacked standing to sue its parent state in these circumstances, because, as the Court said, “[t]he power of the state, unrestrained by the contract clause or the Fourteenth Amendment, over the rights and property of cities held and used for ‘governmental purposes' cannot be questioned.” Id. at 188, 43 S.Ct. 534.

The Court later applied the Trenton rule to hold that a political subdivision lacks standing to bring in federal court a Fourteenth Amendment equal protection challenge to its parent state's actions. Williams v. Mayor & City Council of Balt., 289 U.S. 36, 40, 53 S.Ct. 431, 77 L.Ed. 1015 (1933). Considering a separate, state-law claim, the Court noted that “[w]e have assumed, without deciding, that the respondents, though without standing to invoke the protection of the Federal Constitution, will be heard to complain of a violation of the Constitution of the state.” Id. at 47, 53 S.Ct. 431 (emphasis added). Relying on Trenton and Williams, this court has barred political subdivisions from advancing Fourteenth Amendment claims against their parent states or other political subdivisions of the same state. See Housing Auth. of Kaw Tribe of Indians v. City of Ponca City, 952 F.2d 1183, 1188–89 (10th Cir.1991); see also City of Moore v. Atchison, Topeka, & Santa Fe Ry., 699 F.2d 507, 511–12 (10th Cir.1983).

Despite the broad language in these early cases, the Supreme Court and courts of appeals have shied away from erecting an absolute bar to political subdivisions asserting rights against their parent states in federal court. In Gomillion v. Lightfoot, the Supreme Court explained that these early cases stood for the limited proposition that “the State's authority is unrestrained [as against political subdivisions] by the particular prohibitions of the Constitution considered in those cases,” rather than granting the states “plenary power to manipulate in every conceivable way ... the affairs of municipal corporations.” 364 U.S. 339, 344, 81 S.Ct. 125, 5 L.Ed.2d 110 (1960). Similarly, in Branson, this court, while recognizing the long-standing bar to suits under the federal constitutional provisions at issue in Trenton and Williams, nonetheless concluded there was federal jurisdiction over a political subdivision's claim brought under a federal statute as a Supremacy Clause claim. 161 F.3d at 628–29. Branson made the following distinction: “[A] municipality may not bring a constitutional challenge against its creating state when the constitutional provision that supplies the basis for the complaint was written to protect individual rights,” as opposed to constitutional provisions designed to protect “collective or structural rights” (i.e. the Supremacy Clause). Id. at 628.⁵

Examining the nature of the type of Supremacy Clause claim at issue in Branson reveals a fundamental difference between those claims and claims brought under a substantive provision of the Constitution. The Supreme Court has described the Supremacy Clause as “not a source of any federal rights” but rather operating to “secure federal rights by according them priority whenever they come in conflict with state law.” Chapman v. Hous. Welfare Rights Org., 441 U.S. 600, 613, 99 S.Ct. 1905, 60 L.Ed.2d 508 (1979) (quotations omitted). That is, a plaintiff alleging a Supremacy Clause claim is actually alleging a right under some other federal law, which trumps a contrary state law by operation of the Supremacy Clause.

This court's cases considering political subdivision standing are illustrative. In Branson, the school district alleged the Colorado Enabling Act entitled it to management of school trust lands solely for the benefit of public...