Sanctuary Cities; Sanctuary Campuses

December 02, 2016

Public Finance Alert

Author(s): Richard Jones, Dia Kirby

The outcome of the presidential election has led to widespread fear among state and local government officials of adverse federal action against “sanctuary cities” —a numerous, broadly defined class of municipalities that limit cooperation with federal immigration officials in regards to the identification and deportation of undocumented immigrants. Some universities and colleges (sanctuary campuses) have also indicated various levels of resistance to federal immigration laws or policies.

President-elect Trump, in his “Contract with the American Voter,” has vowed to “cancel all federal funding to sanctuary cities” within his first 100 days in office. Click here. The president-elect’s likely nominee for attorney general, Sen. Jeff Sessions, has long opposed sanctuary cities and supported legislation to remove their federal funding. Click here.

The prospect of losing billions in federal funding compels local and campus officials to consider the potentially devastating financial implications to their entities if they continue to operate as sanctuary jurisdictions.

There is significant ambiguity in the little case law that exists regarding the power of the Executive Branch to withhold federal funding from local governments that do not comply with federal law. But some decisions of the U.S. Supreme Court indicate a strong possibility that withholding federal funding would violate the concept of federalism, which in part allows local governments to remain free from coercion and commandeering by the federal government for the purposes of carrying out federal policies.

In South Dakota v. Dole, 483 U.S. 203 (1987), the Court upheld a federal statute authorizing the secretary of transportation to withhold a percentage of highway funds to states that did not raise their legal drinking age to 21. While setting the legal drinking age was a power reserved to the states, the Court held that Congress could condition states’ receipt of federal grants on compliance with federal statutory and administrative directives. The Court held that the funding conditions must be: (1) unambiguous, “enabl[ing] the [s]tates to exercise their choice knowingly, cognizant of the consequences of their participation” and (2) related to the federal interest in the purpose of the grant.

South Dakota v. Dole would appear to limit the ability of the incoming administration to withhold funding from sanctuary cities, particularly funding that is unrelated to immigration or law enforcement activities. It also means that conditions likely cannot be imposed retroactively, as this would violate the rule that they must be knowingly accepted.

South Dakota v. Dole, however, provides little protection for funding not yet appropriated by Congress. Future funding for sanctuary cities, particularly when related to law enforcement activities, could likely be conditioned on greater adherence to federal immigration enforcement policies.

South Dakota v. Dole also raised the federalism concept of coercion, more recently employed by the Court in NFIB v. Sebelius, 132 S.Ct. 2566 (2012), the landmark Affordable Care Act (“ACA”) decision. The Court struck down a provision of the ACA requiring states to significantly expand their Medicaid programs or risk the loss of all Medicaid funding. While financial inducements from Congress are permissible to “pressure” the states to adopt federal policy, the inducements could not be so harsh as to become “compulsion.” The threat of losing 5% of highway funding in Dole was deemed “relatively mild encouragement,” while the loss of all Medicaid funding, or over 10% of many states’ overall budgets, became “a gun to the head” and was unconstitutionally coercive.

The threat of cancelling all federal funding to sanctuary cities would seem to be akin to a “gun to the head,” thus arguably impermissibly coercing states to support federal immigration policies to avoid draconian penalties.

In Printz v. U.S., 521 U.S. 898 (1997), the Court held unconstitutional a federal statute requiring local jurisdictions to conduct background checks on prospective handgun purchasers because it violated federalism by “commandeering” state government to carry out federal laws. In the immigration context, local officials can argue that denying all funding to locales that refuse to carry out federal immigration enforcement policies runs afoul of this constitutional protection for state sovereignty.

While there are several potentially strong legal arguments for protecting sanctuary cities and sanctuary campuses from the loss of federal funds, the steps that the incoming administration may take to challenge those arguments are not yet known. Local officials and university administrations should closely monitor developments of the presidential transition in the area of immigration policy. They should also be aware of ancillary issues, such as the potential need to make disclosure of this new risk of loss of federal funding in financial statements and bond offering documents.

With extensive, highly relevant experience in the areas of complex federal litigation, government relations, municipal finance, immigration and law enforcement, attorneys at Nixon Peabody LLP are well qualified to advise clients regarding potential issues relating to sanctuary cities and sanctuary campuses.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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