• 27 January 2010

Preemption of Local Regulations Beyond Lozano v. City of Hazleton: Reconciling Local Enforcement with Federal Immigration Policy

Mark S. Grube

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In 1986, Congress enacted “a comprehensive scheme prohibiting the employment of illegal aliens in the United States.”1 Recently, many municipalities have taken matters into their own hands because of dissatisfaction over federal enforcement of these employment regulations.  Municipalities across the country have enacted, or considered enacting, ordinances that penalize employers of unauthorized workers as well as property owners who lease property to undocumented immigrants.  These ordinances have led to a conflict between federal authority, which traditionally regulates immigration, and local authority, which traditionally regulates employment and housing.

There are no easy solutions to these conflicting interests, and courts have disagreed over whether employer and housing sanctions are valid.  The federal statutory provision that preempts local ordinances regulating employment of unauthorized workers creates an exemption for “licensing and similar laws” in a savings clause.  To define “licensing and similar laws,” courts have nothing to turn to but an ambiguous legislative history.  In addition to disputing the proper scope of the savings clause, courts and litigants have disputed the ways in which a local ordinance might conflict with federal immigration laws and policies.  Courts (so far) have responded by using the preemption doctrine to reach a desired result rather than conducting a principle-based analysis of the validity of local laws that impose a licensing penalty on employers of unauthorized workers.

In this Editorial, I argue that courts should adopt a uniform framework for analyzing local employer sanctions and housing laws that focuses on whether the laws conflict with or would undermine federal immigration policy.  Courts should resist the temptation to announce an overly broad preemption doctrine that would undermine local governments’ ability to legislate in areas where they have strong interests.  Rather, courts should determine whether local ordinances upset the policies central to the 1986 legislation: enforcing immigration laws uniformly, preventing discrimination, and imposing only reasonable costs on businesses.

 
I.
Recent Municipal Ordinances

Several municipalities recently enacted ordinances that penalize employers who employ unauthorized workers and landlords who lease property to undocumented noncitizens.  Hazleton, Pennsylvania enacted one such ordinance, which contains provisions typical of most employer sanctions ordinances.  It provides that upon receipt of a written and signed complaint, a city agency will request identity information from an employer and suspend the license of any business that does not comply within three business days.  The city will then submit the documentation to the federal government to verify the worker’s immigration status.  A safe harbor provision provides immunity for businesses that verify a worker’s status using the Basic Pilot Program (now called E-Verify).

Municipalities have also enacted ordinances that penalize landlords for leasing a dwelling unit to undocumented immigrants.  Hazleton’s procedures regarding a landlord suspected of leasing property to an undocumented immigrant are similar to the employer sanctions procedures: any person may file a written complaint, a city agency will verify the tenant’s immigration status with the federal government, and the landlord will have five days to evict a tenant after notification of a violation.  If the landlord does not comply, the landlord faces a license suspension during which she may not collect rent from any tenants.

 
II.
Challenges to Local Employer Sanctions Laws

Congress may expressly forbid states from regulating a specified area of law.  Through federal immigration legislation, Congress has used this power to expressly preempt states and localities from imposing criminal and civil penalties on employers of unauthorized workers.  Congress can also impliedly preempt states and localities from legislating in a particular area.  The federal government’s intention to occupy an entire field of law can preempt any local legislation in that field, and a conflict between local and federal law and policy will also preempt local legislation.

 
A.     Express Preemption

When litigants challenge a local law as preempted by federal law, a court will look to see whether Congress has enacted a specific preemption provision and determine whether the local law falls within the area proscribed by that provision.   On this ground, a district court in the Middle District of Pennsylvania recently struck down a Hazleton, Pennsylvania ordinance barring the employment of unauthorized workers as unconstitutional in Lozano v.  City of Hazleton.2 Hazleton’s Illegal Immigration Relief Act (“IIRA”) mandated license suspensions for businesses that employ “unlawful worker[s].”

The court held that Congress expressly preempted the Hazleton ordinance by enacting 8 U.S.C.  § 1324a(h)(2).  Hazleton unsuccessfully argued that it complied with federal requirements by sanctioning employers with a license suspension rather than a criminal or civil penalty.  The court rejected that argument because “[i]t would not make sense for Congress in limiting the state’s authority to allow states and municipalities the opportunity to provide the ultimate sanction, but no lesser penalty.”[3. Id. at 519.] The court relied on legislative history to establish the scope of the savings clause in § 1324a(h)(2): The savings clause permits states and municipalities to suspend business licenses only for violations of the Immigration Relief and Control Act (“IRCA”), not local regulations.

Less then a year after the Lozano decision, a district court in the Eastern District of Missouri considered a challenge to a Valley Park, Missouri ordinance similar to the Hazleton ordinance in Gray v.  City of Valley Park.3 The court considered whether the ordinance fell under the savings clause as a “licensing or similar law.”  The court found that the ordinance, on its face, looked like a licensing law: it provided for the issuance or denial of business permits.

In September 2008, the Ninth Circuit Court of Appeals became the first federal appellate court to weigh in on the issue of state and local regulations of the employment of unauthorized workers in Chicanos Por La Causa, Inc.  v.  Napolitano.4 In Chicanos Por La Causa, plaintiffs brought a facial challenge to the Legal Arizona Workers Act (“LAWA”), which—like the Hazleton and Valley Park ordinances—revoked the licenses of employers that hired unauthorized workers.  The appeal focused primarily on whether LAWA was a “licensing [or] similar law[]” under 8 U.S.C.  § 1324a(h)(2).  The Ninth Circuit held that LAWA was a “licensing law” under § 1324a(h)(2) and was therefore not expressly preempted.  The court reasoned that language in the legislative history—recognizing the states’ ability to “condition an employer’s ‘fitness to do business’ on hiring documented workers”—contradicted the plaintiffs’ reading requiring a federally adjudicated violation of IRCA to revoke a license.

 
B.     Field Preemption

A court may also strike down a local law if the subject matter inherently leaves no room for local regulation.  Using this field-preemption theory, the Lozano court held that the Hazleton IIRA was invalid.   Two factors controlled this outcome: (1) a strong federal interest in the field of immigration, and (2) the pervasiveness of federal regulations in the field of immigration.

The Gray court also considered whether field preemption barred an ordinance.  The court found that Congress did not intend to occupy completely the field of regulating employment of unauthorized workers.  The preemption provision in IRCA supported this finding because § 1324a(h)(2) permits local licensing regulations.

 
C.     Conflict Preemption

The Lozano court also held that the Hazleton IIRA was invalid under a conflict preemption theory.  The court noted that although IRCA and the Hazleton IIRA have a similar purpose—penalizing employers of unauthorized workers—they use different means to achieve that purpose.  While federal law requires employers to review a worker’s documents and use an I-9 Employment Eligibility Verification Form to establish worker eligibility, the Hazleton IIRA also requires the employer to present the worker’s documents to the local Code Enforcement Office, which determines the status of the worker by contacting the federal government.  The Hazleton IIRA also conflicts with IRCA by failing to contain an exception for casual domestic workers and independent contractors.  Moreover, the Hazleton IIRA mandates use of the Basic Pilot Program, while federal law makes use of the Program optional.  Finally, the timeframe for employers to respond to alleged violations also varied under the Hazleton IIRA and IRCA.   The court also found a conflict in how the United States and Hazleton balance the interests of preventing illegal employment and protecting the rights of businesses and workers.  The Hazleton IIRA places greater burdens on employers, in the interest of preventing illegal employment, than does IRCA.

The Gray court also considered a conflict preemption claim, but found no conflicts between the Valley Park ordinance and IRCA.  The court stated there was no conflict because Congress did not express an intention to forbid states from regulating the employment of domestic workers and independent contractors.  Further, the court rejected an argument that the procedures of the Valley Park ordinance and IRCA conflict.  A “tentative nonconfirmation” from the Basic Pilot program tolls the procedures of the ordinance and allows for the federal procedures to run their course.  Finally, the court found no conflict between the ordinance and IRCA concerning the use of the Basic Pilot program.  The court noted that although the federal government chose not to make participation mandatory, a locality may still provide for greater enforcement than the federal government.

The Ninth Circuit considered whether federal law impliedly preempted a requirement that employers use E-Verify.  The court held that this requirement “for which there is no substitute under development in either the state, federal, or private sectors, is not expressly or impliedly preempted by federal policy.”5 The court reasoned that Congress knew how to explicitly preempt state laws mandating use of E-Verify; however, it did not do so.  Moreover, Congress envisioned broader use of E-Verify and showed no intention to restrict its use.

 
III.
Challenges to Local Housing Sanctions Laws

Ordinances penalizing property owners who provide housing to undocumented immigrants have had less success in federal courts than the employer sanctions ordinances.  Federal courts in Pennsylvania and Texas have struck down housing sanctions ordinances as preempted by federal law.  Other communities have repealed housing ordinances when faced with expensive lawsuits and limited chances of success.

The Lozano court held that Hazleton’s ordinances penalizing landowners for leasing property to undocumented immigrants conflicted with federal law and were void.  First, the court found a conflict because although the federal government will allow certain categories of undocumented immigrants to remain in the United States, Hazleton’s ordinance would deny them access to housing.  Next, the court noted that changing immigration status is a complex procedure.  For example, an individual with a bona fide application for adjustment of status will often have no documents establishing a valid claim to remain in the country until the application is approved—perhaps years later.  The ordinances assume that the federal government seeks the removal of all undocumented migrants; however, federal immigration rules are much more complex and the use of E-Verify is insufficient to determine whether an alien should be removed.

A federal court in Texas has also invalidated a housing ordinance on preemption grounds in Villas at Parkside Partners v. City of Farmers Branch.6 Instead of resting its decision on conflict preemption, like Lozano, Villas at Parkside Partners held that federal law preempted the Farmers Branch ordinance because it was a regulation of immigration.  The Farmers Branch ordinance did not adopt federal immigration requirements, but rather used federal housing regulations to determine which noncitizens could rent housing.  Further, the court noted that the Farmers Branch ordinance required owners and property managers to determine the immigration status of potential tenants, an unlawful regulation of immigration.

 
IV.
Local Employer Sanctions Laws and Federal Immigration Policy

The federal government—with the enactment of IRCA—has signaled that the employment of unauthorized workers is a matter of national concern.  However, courts should be careful not to strike down every law touching on the subject of immigration because an overly expansive view of field preemption could result in localities losing the ability to regulate in areas where they have a strong interest.  In fact, Congress expressly allowed some room for local regulation, leaving it to the courts to define the boundaries of permissible regulation.  Courts should make clear that any employer licensing penalties should closely track federal law so as not to conflict with federal immigration policy by imposing broader liability or excessive burdens on businesses.

 
A.     Express Preemption Under IRCA

The express language of IRCA exempts local licensing regulations from the preemption provision without making clear the scope of this exemption.  Courts should interpret § 1324a(h)(2) to require a federally adjudicated violation of IRCA before a state or municipality may impose a licensing penalty.  The language of the statute and the legislative history have led to varying interpretations of what process IRCA requires before a state may revoke a business license.  The legislative history is vague and merely states that a locality may revoke licenses of a “person who has been found to have violated the sanctions provisions in this legislation,” making clear that there must be a violation of IRCA, as opposed to a local regulation, without defining what entity must find the violation.7 However, a court must interpret the savings clause in light of the entire regulatory scheme.  Allowing a local determination of whether an employer hired an unauthorized worker would be contrary to Congress’s creation of a uniform standard, in IRCA, for regulating the employment of unauthorized workers.  Further, businesses would have difficulties adjusting to the approach suggested in Gray: complying with thousands of potentially conflicting procedures for determining whether a worker is authorized.  Adjudication by a federal entity would comply with Congress’s goals of uniform enforcement and not overburdening businesses.

Courts should also interpret the savings clause of § 1324a(h)(2) to include fitness-to-do-business laws in addition to regular licensing laws.  Interpreting the savings clause using the plain meaning approach does not define the scope of the “similar laws” language.  After discussing Congress’s intent not to interfere with local licensing processes, the legislative history also states that the statute is also not intended to preempt fitness-to-do-business laws.  Furthermore, Congress has consistently expressed a policy preference against preempting state or local laws licensing businesses that supply labor.  Thus, because fitness-to-do-business and licensing laws are the only laws that Congress explicitly mentioned in the legislative history, courts should interpret the phrase “similar laws” to include the fitness-to-do-business laws.

 
B.     Field Preemption

Courts should not rely on field preemption to invalidate local employer sanctions laws.  The express language of IRCA’s preemption provision and its legislative history permit some room for states and municipalities to impose licensing penalties on employers who violate IRCA.  That is why the Lozano court had to go to great lengths to ignore the savings clause of § 1324a(h)(2), which permits some local regulation, in order to find that the Hazleton ordinance was invalid on the basis of field preemption.  In Gray, the court correctly dismissed the field preemption claim quickly by looking at Congress’s intent to permit some level of local regulation.

 
C.     Conflict Preemption

Courts should focus their preemption analysis on whether a challenged local employer sanctions law conflicts with the law and policies of the federal government.  The areas on which I propose courts focus their analysis have the potential to “‘stand[] as an obstacle to the accomplishment . . .  of the full purposes’” of federal immigration policy by preventing uniform enforcement of federal immigration law, overburdening businesses, and encouraging discrimination.8 If local governments draft a regulation that punishes businesses with a licensing penalty for employing illegal workers in a manner consistent with federal law, as outlined below, then courts should allow the local regulation to stand.

First, courts should consider whether the local law mandates use of an employment verification system that is inconsistent with federal law.  Federal law forbids the government from requiring most employers to participate in E-Verify.  Congress’s decision to continue to make participation in E-Verify voluntary reflects important and carefully considered policy decisions.  Most importantly, work-authorized employees still frequently receive tentative non-confirmations from E-Verify resulting in substantial costs.  Allowing states and localities to impose their own employee-status-verification procedures would impose a burden on businesses substantially exceeding Congress’s intentions.  Moreover, a patchwork system of potentially hundreds of different regulatory schemes would defeat Congress’s goal of uniform enforcement.  Given local governments’ limited resources, the federal government is in a better position than local governments to monitor the effectiveness of the E-Verify program and determine when to make it mandatory on a nationwide basis.

Second, courts should consider whether a local law applies to the same employment activities that Congress intended to regulate.  Regulations promulgated pursuant to IRCA exclude independent contractors and casual domestic workers from the definition of employee.  A local regulation that penalizes employers of independent contractors and casual domestic workers would impose a heavier burden on employers than Congress expressly intended to impose.

Third, courts should consider whether the procedures of a local regulation are compatible with the procedures of federal employer sanctions provisions.  Local regulations requiring an employer to discharge an employee before the required eight-day period has elapsed place employers in the precarious position of deciding which law to follow.  Local laws should make clear that employers relying on an E-Verify system may not terminate an employee until after a cure period pursuant to federal law, and courts should find that federal law preempts a local ordinance that does not explicitly follow federal procedures.

Fourth, courts should consider whether a local law upsets IRCA’s balance of employer sanctions and anti-discrimination provisions.  Congress, when enacting employer sanctions provisions, expressed concern about the potential for discrimination and stated that anti-discrimination provisions were essential to IRCA.  Municipal ordinances must provide proportionate safeguards against discrimination to avoid conflicting with federal law prohibiting discrimination.  If municipalities choose to impose licensing penalties following the procedures of § 1324a, they should also provide protections to minority employees comparable to those in § 1324b.

 
V.
Local Housing Sanctions Laws and Federal Immigration Policy

A court’s analysis of housing sanctions, like its analysis of employer sanctions, should focus on conflicts with federal law and policy.  As discussed above, courts should not rely on a field preemption theory to strike down local immigration ordinances: courts could only accomplish this with an overly expansive field definition that would result in localities losing the ability to regulate in a wide variety of areas in which they have a strong interest.

Courts should not rely on a regulation-of-immigration theory to preempt local housing laws.  This is a narrow test and an immigration regulation “is essentially a determination of who should or should not be admitted into the country, and the conditions under which a legal entrant may remain.”9 An overly expansive view of what constitutes immigration regulation could lead to the federal immigration power preempting a wide variety of local legislation.

Courts should rely on conflicts with federal law and policy to strike down local housing regulations.  First, courts should analyze whether a local housing ordinance would deny access to housing to immigrants who are lawfully in the United States.  Housing provisions that deny legal immigrants access to housing conflict with federal law because they place a “discriminatory burden[] upon the . . . residence of aliens lawfully within the United States.”10 Second, courts should analyze whether a housing ordinance conflicts with federal law by requiring state or local officials to determine a housing applicant’s immigration status.  Third, housing provisions conflict with federal law when they attempt to deny shelter to undocumented immigrants as a proxy for deportation—an exclusively federal power.  The effect of such an ordinance is to exclude undocumented immigrants from a community.

 
Conclusion

Courts have seen extensive litigation on the subject of local ordinances regulating the employment of unauthorized workers and reached contradictory results.  Courts should recognize that Congress expressed an intention to allow states and municipalities to enact licensing regulations and fitness-to-do-business laws that penalize employers found, by a federal adjudication, to have employed unauthorized workers.  Courts should not rely on the field preemption theory because Congress has explicitly left some room for local regulation.  Rather, courts should carefully inspect an ordinance and focus on whether it undermines federal immigration policy.  If states and localities craft legislation that conforms to federal laws and procedures, they may then choose to impose a licensing penalty in addition to the civil and criminal penalties imposed by IRCA.  Further, courts should strike down housing ordinances that conflict with the federal government’s exclusive authority to order deportation.

 

Acknowledgments:

I would like to thank the staff of the Cornell Law Review for their thoughtful suggestions, Professor Stephen Yale-Loehr for his comments on an earlier draft of this paper, and my family and friends for their constant support.

Copyright © 2010 Cornell Law Review.

Mark S. Grube is a 2010 J.D. Candidate at Cornell Law School.

This Legal Workshop Editorial is based on the following Student Note: Mark S. Grube, Note, Preemption of Local Regulations Beyond Lozano v. City of Hazleton: Reconciling Local Enforcement with Federal Immigration Policy, 95 CORNELL L. REV. 391 (2010).

  1. Hoffman Plastic Compounds v. NLRB, 535 U.S. 137, 147 (2002).
  2. 496 F. Supp. 2d 477 (M.D. Pa. 2007).
  3. No. 4:07CV00881 ERW, 2008 WL 294294 (E.D. Mo. Jan. 31, 2008).
  4. Chicanos Por La Causa, Inc. v. Napolitano, 544 F.3d 976 (9th Cir. 2008).
  5. Id.
  6. 577 F. Supp. 2d 858, 874 (N.D. Tex. 2008).
  7. H.R. REP. No. 99-682(I), at 58 (1986), reprinted in 1986 U.S.C.C.A.N. 5649, 5662.
  8. Geier v. Am. Honda Motor Co., 529 U.S. 861, 899 (2000) (Stevens, J., dissenting) (quoting Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995) (internal quotations omitted)).
  9. De Canas v. Bica, 424 U.S. 351, 355 (1976).
  10. Takahashi v. Fish & Game Comm’n, 334 U.S. 410, 419 (1948).

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