Hon. Thomas B. Bennett
37 Campbell L. Rev. 3 (2015)
INTRODUCTION. Today, consent is a topic of much debate in the bankruptcy realm, as is evidenced by the Supreme Court’s recent and upcoming considerations of the ability of private parties to consent to a bankruptcy judge’s adjudication of matters that without consent, may necessitate determination by a federal judge having lifetime tenure. Though some of what is to be presented has application to this context, it is not the subject for consideration here. Rather, it is the scope, blips, and blemishes that swirl around one sovereign’s consent to jurisdiction over a part of it, a subdivision of a state, by another sovereign, the United States.More precisely, it is whether the perceived scope of consent to a federal court’s bankruptcy jurisdiction over a state’s municipal subdivision is correct. A number of reported decisions of bankruptcy courts, and even more legal articles, espouse the idea that once a state authorizes—that is, consents—to the filing of a Chapter 9 bankruptcy case by one of its municipalities, neither the state, the municipality, nor anyone else may reject the use of any parts of Chapter 9 along the road to readjustment of debts.
To view the scope of consent, a structural framework must be recalled. It is the relationship of the states to the United States under the Constitution, which is often referred to as federalism, and involves the interplay of how dual sovereigns have allocated, reserved, and, yes, ceded, powers. Remember that neither the Constitution nor the Bill of Rights came first. Rather, it was the Articles of Confederation, which vested very little power in what we view now as the Executive Branch of our government. Instead, Congress held the most power under a structure that retained in the hands of the thirteen colonies many of the critical powers necessary for an effective central government.
Experiencing the failings of such a structure initiated the process that led to enactment of the Constitution, along with the Bill of Rights. Among other things, the Constitution is a ceding of powers held by the state sovereigns to a central government. Some are absolutely given up, and others are given up only upon the federal government’s exercise of powers granted to it by the various states through the Constitution. One that is given up only on the United States’ exercise of its constitutional grant is that for the provision of uniform laws on bankruptcy.
What was a serious afterthought to the Constitution is the Bill of Rights, and for our purposes, the Tenth Amendment’s reservation to the states or to the people, the “powers not delegated to the United States by the Constitution, nor prohibited by it to the states. It is the evolving, dynamic interplay of what is reserved to the states under the Tenth Amendment with that which is ceded or allocated to the central government, along with what is denied to the states under the Constitution that is the structure that must be dissected to have some idea of what may be the boundary of consent of a state to one of its parts being subjected to the federal government’s exercise of its Bankruptcy Clause powers.
AUTHOR. The Honorable Thomas B. Bennett is the Chief Bankruptcy Judge at the United States Bankruptcy Court for the Northern District of Alabama.