01-46 Federal Maritime Commission v. South Carolina Ports Authority

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Two arguments made by the United States to support its claim that sovereign immunity does not apply to FMC proceedings are unavailing. That the FMC’s orders are not self-executing does not mean that a State is not coerced into participating in an FMC adjudicative proceeding. A State charged in a private party’s complaint with violating the Shipping Act has the option of appearing before the FMC in a bid to persuade that body of the strength of its position or substantially compromising its ability to defend itself because a sanctioned party cannot litigate the merits of its position later in a federal-court action brought by the Attorney General to enforce an FMC nonreparation order or civil penalty assessment. This choice clearly serves to coerce States to participate in FMC adjudications. And the argument that sovereign immunity should not apply because FMC proceedings do not present the same threat to the States’ financial integrity as do private judicial suits reflects a fundamental misunderstanding of sovereign immunity’s primary purpose, which is not to shield state treasuries but to accord States the respect owed them as joint sovereigns. In any event, an FMC reparation order may very well result in the withdrawal of funds from a State’s treasury because the FMC might be able to assess a civil penalty against a State that refused to obey a reparation order, and if the Attorney General, at the FMC’s request, then sought to recover the penalty in federal court, the State’s sovereign immunity would not extend to that suit brought by the Federal Government.

243 F.3d 165, affirmed.

Local effect:

The issue has not previously been considered by the Seventh Circuit

Thomas, J.; Stevens, J., dissenting; Breyer, J., dissenting;