State laws interfering with federal government operations within the state present a constitutional problem that goes back to the early days of the republic. In the early nineteenth century, the Bank of the United States was very controversial, and the State of Maryland tried to kill it with a discriminatory tax. The Supreme Court declared the tax unconstitutional in a landmark decision by Chief Justice Marshall, M’Culloch v. Maryland, 17 U.S. 316 (1819).
Within California, immigration enforcement efforts are highly controversial, particularly in the prior Administration. Privately operated prisons are also very controversial. The state can, of course, choose not to use such prisons itself. However, the California Legislature in 2019 enacted AB 32, barring any person from operating a private prison. In essence, they barred federal contractors from continuing to provide services they had long provided to the federal government.
The federal district court upheld the statute, but in October of last year a divided three-judge panel of the Ninth Circuit struck it down. The Ninth granted rehearing en banc, which in the Ninth Circuit means rehearing by an 11-judge panel of the chief judge and 10 randomly selected judges. Yesterday, that panel voted 8-3 to strike down the statute. Judge Nguyen wrote the majority opinion, and Chief Judge Murguia wrote the dissent.
The case raises interesting issues regarding the extent of discrimination against the federal government and whether that discrimination is “direct” or hindering federal operations as a practical matter. In practice, a prohibition aimed at contractors is aimed squarely at the federal government. Who else operates detention facilities? The state itself can simply choose not to contract detention out, and it can ban its subdivisions from doing so. The only need for a ban operating on the contractors is to stop their use by the one government within the state that California cannot directly regulate — the federal government.
The problem involves a Supreme Court precedent with no majority opinion, North Dakota v. United States, 495 U.S. 423 (1990), so this case might be a vehicle for SCOTUS to clear up that problem.
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