Hill v. Kemp

F I L E D
United States Court of Appeals
PU BL ISH Tenth Circuit

March 6, 2007
UNITED STATES COURT O F APPEALS
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court

HAROLD E. HILL; M ARGARET R.
M cCRIGH T; W ILLIAM F. M cCRIGH T;
JOHN J. M cQUEEN; RITA J.
M OSK OW ITZ; BA RBA RA SANTEE;
O K LA H OMA R ELIG IO U S
C OA LITIO N FO R R EPR OD U CTIVE
CHOIC E EDUCATIO N FUND, IN C.,

Plaintiffs-Appellants,
v.
No. 05-5160
THOM AS E. KEM P, Chairman,
Oklahoma Tax Commission; JERRY
JOHN SON, Vice Chairman, Oklahoma
Tax Com mission; C ON N IE IR BY,
Secretary-M ember, Oklahoma Tax
Commission; SCOTT M EACHAM ,
Treasurer, Oklahoma State Treasury;
HOW ARD H. HENDRICK, Director,
Oklahoma D epartment of Human
Services; BRAD HENRY, Governor of
the State of Oklahoma; W .A. DR EW
EDM ONDSO N, Attorney General of the
State of Oklahoma,

Defendants-Appellees.

Appeal from the United States District Court
for the N orthern District of Oklahom a
(D .C . No. 04-CV-28-CVE-PJC)

Suzanne M . Grosso (M olly S. Boast with her on the briefs), Debevoise & Plimpton,
LLP, New York, New York; Priscilla J. Smith and Sanford M . Cohen, Center for
Reproductive Rights, New York, New York; M artha M . Hardwick, Hardwick Law
Office, Tulsa, Oklahoma, for Plaintiffs-Appellants.

Ernest H. Short, General Counsel (Douglas B. Allen and Cara S. Nicklas,
Assistants General Counsel, with him on the brief), Oklahoma Tax Commission,
Oklahoma City, Oklahoma, for Defendants-Appellees Thomas E. Kemp, Jerry
Johnson, and Connie Irby.

Richard W . Freeman, Jr., Assistant General Counsel, Department of Human
Services, Oklahoma City, Oklahoma,(Kevin L. M cClure, Assistant Attorney
General, Oklahoma City, Oklahoma, with him on the briefs), for Defendants-
A ppellees H ow ard H . H endrick, Scott M eacham, Brad Henry, and W .A. “Drew”
Edmondson.

Before TYM K O VICH , EBEL, and G O RSU CH , Circuit Judges.

G O R SU CH, Circuit Judge.

Certain individuals who license and operate their cars in the State of

Oklahoma (the “M otorists”), together with the Oklahoma Religious Coalition for

Reproductive Choice Education Fund, Inc. (“O RC”), argue that Oklahoma’s

statutory scheme for specialty motor vehicle license plates is unconstitutional

under the First and Fourteenth Amendments. In claims one through four of their

amended complaint, the M otorists contend that Oklahoma’s laws unlaw fully

discriminate against their views by permitting drivers to obtain license plates

bearing the messages “Adoption Creates Families” and “Choose Life” under terms

and conditions more favorable than those available to those who wish to have

license plates bearing messages of support for abortion rights. In claims five and

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six, ORC argues that Oklahoma uses proceeds from its specialty license plate

program to fund groups involved in adoption-related activities but impermissibly

refuses to fund ORC’s own adoption-related efforts solely because of its separate

and distinct advocacy in favor of abortion rights.

In response to defendants’ Rule 12(b) motion to dismiss, the district court

dismissed this case on jurisdictional grounds without reaching its merits.

Specifically, the district court held that the Tax Injunction Act (“TIA”), 28 U.S.C.

§ 1341, passed by Congress to address federal court interference with state revenue

raising efforts, precluded it from hearing claims one through four; with respect to

claims five and six, the court concluded that the Eleventh Amendment’s guarantee

of state immunity from suit in federal court prevented it from exercising review.

W hile we agree with the district court that Congress, through the TIA, has deprived

the federal courts of jurisdiction over claims one through four, we hold that the

Eleventh Amendment does not preclude consideration of claims five and six on

their merits. W e thus remand this matter for further proceedings on those counts.

I

A

The Oklahoma Tax Commission (“Tax Commission”) is charged with

enforcing the State’s Vehicle License and Registration Act (“the Registration

Act”). Consistent with similar laws across the country, the Registration Act

requires that every motor vehicle owner purchase a license plate and display it on

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his or her car. But, as is also increasingly typical today, the law provides a process

by which motorists can pay an additional amount to the Tax Commission to obtain

specialty license plates conveying messages ranging from “Veterans of Foreign

W ars” to “Round and Square Dancing.” See 47 Okla. Stat. §§ 1135.2, 1135.3,

1135.5, 1135.6.

Pertinent for our purposes, the Oklahoma Legislature in 2002 and 2004

specifically authorized specialty plates bearing the phrases “Adoption Creates

Families” and “Choose Life.” 47 Okla. Stat. §§ 1135.5(B)(22) and (23); 2002

Okla. Sess. Laws, ch. 179 § 1 (“Choose Life” plates); 2004 Okla. Sess. Laws, ch.

504 § 14 (“Adoption Creates Families” plates). 1 These two plates were among

approximately 110 specialty plates the Legislature specifically authorized for

immediate issuance, albeit with the further instruction that, if fewer than 100 of

any kind of plate was issued before a date certain, the Tax Commission could stop

issuing that particular plate. 47 Okla. Stat. § 1135.5(A ).

The “Adoption Creates Families” and “Choose Life” plates both cost $35 in

addition to normal licensing charges. 47 Okla. Stat. § 1135.5(C). For the

“Adoption Creates Families” plate, $8 of the $35 charge goes to the Tax

Commission Reimbursement Fund for the administration of the Registration Act,

1
Special license plates demonstrating support for adoption originally issued
in 2001 w ith the phrase “Respect Life – Support Adoption.” 2001 Okla. Sess.
Laws, ch. 434 § 12. In 2004, the legislature recodified a portion of the special
license plate program, and the adoption-support plates now bear the “Adoption
Creates Families” phrase. 2004 Okla. Sess. Laws, ch. 504 §§ 14(B)(22), 22.

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47 Okla. Stat. §§ 1135.5(C)(2); $25 goes to “a revolving fund established in the

State Treasury for and to be used by the D epartment of Human Services [(“D HS”)]

for the implementation of the Investing in Stronger Oklahoma Families Act

specifically for created families,” 2 id. § 1135.5(B)(22); and the remaining $2 is

apportioned among school districts, municipalities, and various other state funds,

id. § 1135.5(C)(3). 3

For the “Choose Life” plate, $8 is directed to the Tax Commission

Reimbursement Fund to cover administrative costs associated with the Registration

Act, 47 Okla. Stat. §§ 1135.5(C)(2); $20 goes to “a revolving fund [created in the

State Treasury] for the D epartment of Human Services to be designated the Choose

Life Assistance Program,” id. § 1104.6(B); and the remaining $7 is apportioned

among school districts, municipalities, and various other state funds, see id.

§ 1135.5(C)(3); supra at note 3. M onies in the C hoose Life A ssistance Program are

disbursed by the State to non-profit organizations that “counsel[] pregnant women

2
The Investing in Stronger Oklahoma Families Act was passed in order to
“provide assistance to guardians of children, adoptive parents and other ‘created
families’, to assist such guardians, adoptive parents and families to assume permanent
custody of children in need of safe and permanent homes, and to enhance family
preservation and the stability of these homes.” 10 Okla. Stat. § 22.2(B). This law
authorizes DHS to provide, inter alia, case management services, child care and after
school care, transportation, and counseling for adoptive families. Id. § 22.2(H).

3
The specific apportionment of these monies changes from year to year, but for
illustrative purposes the money is directed roughly as follows: 36% to school districts
according to a funding formula; 45% to the State’s general revenue fund; 0.3% to the
State Transportation Fund; 11% to the counties according to various funding formulas;
about 3% to cities and towns; 1% to the Oklahoma Law Enforcement Retirement Fund;
and 0.03% to the Wildlife Conservation Fund. 47 Okla. Stat. § 1104.
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who are committed to placing their children for adoption.” Id. § 1104.6(C)(3). By

statute, however, organizations are ineligible to receive funds if they are “involved

or associated with any abortion activities, including counseling for or referrals to

abortion clinics, providing medical abortion-related procedures, or pro-abortion

advertising.” Id. § 1104.6(C)(4); see also id. § 1104.6(D) (“Funds may not be

distributed to any organization that is involved or associated with abortion

activities, including counseling for or referral to abortion clinics, providing

medical abortion-related procedures, or pro-abortion advertising.”).

W hile many license plates cost $35 and direct a portion of the funds to

specific state programs associated with the m essage on the specialty plate, others

cost less and do not direct money to specific initiatives. Thus, for example, a

license plate expressing support for the Air Force Academy costs $15, $8 of which

is directed to the Tax Commission to cover costs and the remainder of which is

directed to school districts, municipalities, and other general state purposes. See

47 Okla. Stat. §§ 1135.3(B)(34), 1135.3(C); supra at note 3. Certain other license

plates issued in recognition of past military service, current public service, and the

like, are provided at $8 and funds derived from the sale of these plates are directed

exclusively to the Tax Commission to cover administration costs. Id.

§§ 1135.2(B)(1), (8) & 1135.2(C).

After plaintiffs initiated this lawsuit, the Oklahoma Legislature decided in

2005 to expand the number of specialty plates beyond the 110 or so it had already

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enumerated. Effective January 1, 2006, the legislature authorized the Tax

Commission to design and issue specialty plates demonstrating support for any

organization, group, or cause so long as the message does not advertise or endorse

a product, brand or service, does not promote prejudice, and is not contrary to state

civil rights laws. See 47 Okla. Stat. § 1135.7. It is undisputed by the parties that

the M otorists and ORC can use this new procedure to obtain license plates

displaying their preferred messages, including ones voicing support for abortion

rights. However, specialty plates issued under this new law may be issued only

after the Tax Commission has received 500 prepaid applications for the particular

specialty plate at issue. Id. § 1135.7(B)(4).

As with the plates previously authorized by the legislature, specialty plates

issued under this new regime may also be designated by their sponsors to provide

financial assistance to a state-sponsored initiative or program. Plates designed to

provide such assistance cost $35, of which $8 goes to the Tax Commission

Reimbursement Fund to defray the cost of the plates, $7 is apportioned among

school districts, municipalities, and various state funds, see id. § 1135.7(D)(3);

supra at note 3; and $20 is directed to “a state agency . . . responsible for

expending the funds [according to the] specific public purpose” identified with the

specialty plate at issue. Id. § 1135.7(E). M otorists and ORC do not dispute that

they can design plates to provide funding for initiatives they support, including

abortion rights. As with the preexisting statutory regime, specialty plates

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authorized under Oklahoma’s new statute that are not associated with a particular

state fund or initiative cost $15, of which $8 goes to the Tax Commission

Reimbursement Fund and $7 is apportioned among school districts, municipalities,

and various state funds. Id. § 1135.7(C).

B

ORC is a non-profit organization that provides free services to pregnant

women; these services include, inter alia, counseling about “all reproductive

options” (including adoption and abortion), maintaining a “Roe” fund to help cover

costs of abortion for indigent women, and sending its members to “stand as a non-

confrontational and peaceful presence outside health facilities providing abortion

services.” (Am. Compl. ¶¶ 24, 26.) M otorists are Oklahoma residents identifying

themselves as individuals w ho support “a woman’s freedom to choose among all

available reproductive options both before and after conception.” (Id. ¶ 16.) In

claims one through four of the amended complaint, the M otorist plaintiffs allege

that Oklahoma’s specialty license plates statutory scheme unconstitutionally

discriminates against those w ho wish to show their support for “a woman’s

freedom to choose among all available reproductive options both before and after

conception.” (Id.) M ore specifically, they allege that those seeking a special

license plate expressing support for abortion rights are not treated equally to those

who apply for the “Choose Life” or “A doption Creates Families” license plates. In

claims five and six, ORC challenges the funding restrictions associated with the

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Choose Life Assistance Program, arguing that the State’s refusal to provide funds

under this particular program to groups that express support for and engage in

advocacy about abortion amounts to an “unconstitutional condition,” requiring it to

forego its protected First Amendment speech activities in order to qualify for

governmental benefits.

As remedy, the M otorists seek injunctive relief and a declaratory judgment

that Oklahoma’s entire special license plate regime is unconstitutional, 4 while ORC

seeks declaratory and injunctive relief preventing the State from enforcing

provisions that condition a group’s entitlement to receive funds under the Choose

Life Assistance Program on a determination that the group is not “involved or

associated with any abortion activities, including counseling for or referrals to

abortion clinics, providing medical abortion-related procedures, or pro-abortion

advertising.” 47 Okla. Stat. § 1104.6(C)(4); see also § 1104.6(D ).

Plaintiffs filed their suit on January 14, 2004, against various State officials

– the Governor, State Attorney General, Treasurer, Director of the Department of

Health and Human Services, and certain members of the Oklahoma Tax

Commission. W ithout responding to the merits of plaintiffs’ claims, defendants

collectively moved to dismiss the case as a matter of law under Federal Rule of

4
Alternatively, M otorists seek relief affecting only the issuance of “C hoose
Life” and “Adoption Creates Families” plates. (Am. Compl. ¶¶ 164-65.) They do
not challenge the “Physically Disabled” and “Hearing Impaired” license plates, 47
Okla. Stat. § 1135.1(B)(3) and (5), or plates on which motor vehicle owners are
allowed to pick and choose their own numbers, letters or symbols, sometimes
known as “personalized” or “vanity” plates, id. § 1135.4.
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Civil Procedure 12(b). 5 In its ruling on that motion, the district court dismissed

claims one through four on the ground that, through the TIA, Congress denied

federal courts the power to hear lawsuits that seek to enjoin the levy or collection

of state taxes, and that the collection of assessments associated with the specialty

license plate program qualify as taxes under state law. The district court also

dismissed claims five and six on the basis that the Eleventh Amendment immunizes

defendants from suit in federal court. Finally, the district court held that the

Governor and state Treasurer w ere so tangentially related to the issues in dispute

that, whatever else the Eleventh Amendment may require, it commands their

individual dismissal under Ex parte Young, 209 U.S. 123, 157 (1908) (requiring a

plaintiff seeking an exception to Eleventh Amendment immunity to show, inter

alia, that the state official defendants have “some connection with the enforcement

of the act” in question). 6

5
Courts in at least two other circuits have reached the merits of similar
claims, though their conclusions differ in significant respects. Compare ACLU of
Tenn. v. Bredesen, 441 F.3d 370 (6th Cir. 2005) (holding that Tennessee’s specialty
licensing scheme, which included a “Choose Life” plate but not a “Pro-Choice”
plate, did not violate plaintiff’s First Amendment rights), with Planned Parenthood
of S.C., Inc. v. Rose, 361 F.3d 786 (4th Cir. 2004) (holding that South Carolina
specialty licensing scheme authorizing a “Choose Life” plate without a pro-choice
alternative did violate plaintiff’s First Amendment rights). See also Choose Life
Ill., Inc. v. White, No. 04 C 4316, 2007 W L 178455 (N.D. Ill. January 19, 2007)
(following Fourth Circuit precedent and holding unconstitutional Illinois’s refusal
to issue “Choose Life” license plates).
6
The district court’s dismissal of these individuals is not challenged in this
appeal.

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 II

A

Before assessing M otorists’s appeal with respect to claims one through four,

we must address defendants’ assertion that this portion of the appeal is moot.

Seneca-Cayuga Tribe of Okla. v. Nat’l Indian Gaming Comm’n, 327 F.3d 1019,

1028 (10th C ir. 2003) (“[B ]ecause questions of mootness go to our jurisdiction, w e

are required to address this issue at the outset.”). Plaintiffs filed their initial

complaint when Oklahoma had a finite list of approximately 110 specialty plates,

including the “Choose Life” plate, but no analog expressing support for abortion

rights. Oklahoma’s 2005 law changed all that, of course, permitting virtually any

group to receive specialty plates voicing support for its cause. Defendants assert

(and plaintiffs do not dispute) that M otorists are now free to apply for and receive a

specialty plate demonstrating their support for abortion rights and even providing

financial support to abortion-related programs. These changed circumstances,

defendants argue, moot plaintiffs’ complaint with respect to the licensing aspect of

this case.

A legislature is, of course, free to amend its own laws at any time and

thereby moot ongoing litigation. Shawnee Tribe v. United States, 423 F.3d 1204,

1216-17 (10th Cir. 2005). Indeed, it is undoubtedly a commendable thing when the

people’s representatives are able, through the legislative process, to defuse

potentially needless constitutional litigation. But, if after passage of the new

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legislation, a plaintiff still “retain[s] a legally cognizable interest in the outcome,

the case is not moot,” and we are not free to shirk the responsibility of deciding the

remaining controversy before us. Seneca-Cayuga Tribe, 327 F.3d at 1028 (internal

quotation marks and citation omitted); see also City of Erie v. Pap’s A.M ., 529 U.S.

277, 287 (2000).

This is just such a situation. W hile the Oklahoma Legislature has taken a

significant step in allowing groups of all viewpoints to obtain specialty plates, a

non-trivial and arguably discriminatory burden remains on those associated with

plaintiffs’ point of view . Under Oklahoma’s regime, those plates specifically

authorized by name by the legislature – including the Choose Life and Adoption

Creates Families (among a great many others) – were issued immediately, subject

only to the caveat that the Tax Commission could discontinue any plate if fewer

than 100 were issued before a prescribed date. 47 Okla. Stat. § 1135.5(A). By

contrast, under the 2005 “all comers” statutory rubric, plates expressing support for

other causes – including abortion rights – can be issued only if and when the Tax

Commission receives 500 prepaid applications within 180 days after the particular

plate is authorized. 47 Okla. Stat. § 1135.7(B)(4). Simply put, there remains a

difference between how Oklahoma treats those who wish to obtain a Choose Life or

Adoption Creates Families plate, on the one hand, and those who wish to obtain a

license plate expressing support for abortion rights, on the other. The latter group

has to come up with 500 prepaid applications w ithin a specified time frame, while

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the former group is presumptively grandfathered in. The difference may not be

insurmountable or even particularly onerous, but neither does it diminish the fact

that a difference arguably preferring one competing viewpoint over another

remains embedded in Oklahoma law. Accordingly, we are unable to say

definitively that claims one through four are moot.

B

This leaves us confronting directly the question whether, as the district court

held and defendants maintain, the TIA precludes our jurisdiction with respect to

these claims. In the TIA, Congress succinctly and sweepingly directed that federal

district courts “shall not enjoin, suspend or restrain the assessment, levy or

collection of any tax under State law where a plain, speedy and efficient remedy

may be had in the courts of such State.” 28 U.S.C. § 1341. Defendants and the

district court argue that the money paid to Oklahoma under the specialty licensing

regime falls within the ambit of the statutory phrase “any tax under State law,”

while plaintiffs contended before the trial court and in briefing before us that the

money collected is not a tax but a regulatory fee incident to the State’s police

powers rather than its taxing authority.

Our starting point is, as it must be, with the plain terms of the law Congress

enacted. At the time the TIA was adopted, one contemporaneous dictionary

defined the term “tax” as “[a]n enforced, usually proportional, contribution, esp. of

money, levied on persons, income, land, commodities, etc., for the support of

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government and for the public needs; sometimes, a charge, as for a thing.” 3 The

New Century Dictionary of the English Language 1949 (1927). Another dictionary

defined “tax” as “[a] charge, esp. a pecuniary burden imposed by authority; specif.,

a charge or burden, usually pecuniary, laid upon persons or property for public

purposes; a forced contribution of wealth to meet the public needs of a

government.” Webster’s New International Dictionary of the English Language

2587 (2d ed. 1934). U nder either definition, Oklahoma’s regime involves taxes.

Oklahoma here enforces a contribution of money levied on the distribution of a

comm odity that it asserts the exclusive power, by virtue of its sovereignty, to issue;

likewise, it plainly imposes a charge for a thing. And through its statutory regime,

the Oklahoma Legislature generates and distributes funds for a wide variety of

public purposes.

Perhaps even more pointedly, Judge Cooley 7 long ago confronted the

question how to distinguish between taxes and fees and even how to categorize

assessments that appear to have characteristics of both. “Suppose a charge is

imposed partly for revenue and partly for regulation,” he asked, “Is it a tax or an

exercise of the police power?” 1 Thomas M . Cooley, The Law of Taxation 98 (4th

ed. 1924) (hereinafter “Cooley”). Cooley answered: “cases of this nature are to be

7
The Supreme Court has continually cited to Cooley’s taxation treatise, referring
to him as a “text writer[] of high authority.” Parsons v. District of Columbia, 170 U.S.
45, 55 (1898); see also, e.g., Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503, 523-24 (1981)
(citing Cooley on Taxation in interpreting TIA’s “plain, speedy and efficient remedy”
exception).

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regarded as cases of taxation. If revenue is the primary purpose, the imposition is a

tax. Only those cases w here regulation is the primary purpose can be specially

referred to the police power.” Id. at 99 (internal citations omitted); see also id. at

109-10 (noting that even fees – such as for recording and filing certificates of

incorporation, for inspections, or for docketing legal filings – can be taxes “if the

object is to provide general revenue rather than to compensate the officers [who

perform the service at issue], and the amount of the fee has no relation to the value

of the services. . . . In other words, a charge fixed by statute for the service to be

performed by an officer, where the charge has no relation to the value of the

services performed and where the amount collected eventually finds its w ay into

the treasury of the branch of the government whose officer or officers collect the

charge, is not a fee but a tax.”).

W e have no qualms finding in this case that the primary purpose of the

special license plate scheme is revenue rather than regulation and thus that it

qualifies as a tax under Judge Cooley’s formulation. Under Oklahoma’s scheme,

only $8 of each plate sold goes to the administration of the Registration Act; the

remaining funds are collected to be disbursed for a variety of public purposes

identified by the Legislature. To be sure, for $35 plates much of the remaining

money goes to specific state funds and policy objectives associated w ith the license

plate in question (e.g., $20 in the case of the Choose Life plates and $25 in the case

of the Adoption Creates Families plates). But the entire community benefits from

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this scheme as these funds are variously spread among a wide array of State

initiatives – ranging from adoption and urban forestry programs to education,

grants for organizations that provide dog or cat spaying and neutering services, and

the Oklahoma N ational Guard, to name just a few. And, of course, a portion of the

funds for both the $35 and $15 plates (those demonstrating support for or

membership in an organization or cause but not providing financial support, such

as the Benevolent Protective Order of Elks or the Parrothead Club, 47 Okla. Stat.

§§ 1135.3(16) and (25)) is distributed widely to a variety of municipalities, school

districts, and the like, that have no relationship whatsoever to the message on the

license plate at issue.

Current definitions of “tax” lead us in the same direction. Black’s Law

Dictionary defines “tax” as a “monetary charge imposed by the government on

persons, entities, transactions or property to yield public revenue. M ost broadly,

the term embraces all governmental impositions on the person, property, privileges,

occupations, and enjoyments of the people, and includes duties, imposts, and

excises.” Black’s Law Dictionary 1496 (8th ed. 2004). Oklahoma’s special license

plate regime surely involves monetary charges imposed by the government on a

transaction to yield public revenue. The Oxford English Dictionary adds that

“‘[t]ax’ is the most inclusive term for these contributions [to the support of

government]. . . . In the U.S., ‘tax’ is more generally applied in ordinary language

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to every federal, state, or local exaction of this kind.” 17 Oxford English

Dictionary 677 (2d ed. 1989). 8

This plain language understanding of the phrase “any tax under State law”

comports with our precedent. In M arcus v. Kansas, Department of Revenue, 170

F.3d 1305, 1312 (10th Cir. 1999), we held that “[t]he critical inquiry focuses on the

purpose of the assessment and the ultimate use of funds.” Id. at 1311. Faced in

M arcus (as w e are here) w ith an argument that the assessment at issue amounted to

a regulatory “fee” incident to the State’s police power rather than a “tax under

State law,” we identified several identifying characteristics of state taxes:

[T]he classic tax sustains the essential flow of revenue to the
government, w hile the classic fee is linked to some regulatory scheme.
The classic tax is imposed by a state or municipal legislature, while
the classic fee is imposed by an agency upon those it regulates. The
classic tax is designed to provide a benefit for the entire community,
while the classic fee is designed to help defray an agency’s regulatory
expenses.

M arcus, 170 F.3d at 1311 (quoting Home Builders Ass’n of M iss., Inc. v. City of

M adison, M iss., 143 F.3d 1006, 1011 (5th Cir. 1998)). So we might say that a

“classic tax” includes an income tax, imposed by the legislature to defray general

state expenses (even though a portion may go to defray the administration of the

income tax collection system), while a “classic fee” might be an entry charge

8
See also Erwin Chemerinsky, Federal Jurisdiction 734 (4th ed. 2003) (“Courts
have broadly interpreted the [TIA] as preventing federal courts from interfering with
virtually all forms of state and local taxes.”); id. at 735 (“[L]ower courts generally have
followed a commonsense approach, finding, for example, that registration fees . . . have
the primary purpose of raising revenue and thus should be classified as taxes.”).
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imposed by a state park authority to regulate park usage and support only the

upkeep of the park.

Applying the considerations set forth in M arcus, we cannot help but

conclude that they weigh in favor of holding the specialty license plate assessments

to be taxes. First, there is no question that the genesis of the special license plate

assessment scheme was the Oklahoma Legislature, not some regulatory body;

indeed, the amount of each assessment is expressly prescribed by statute. Second,

critical under M arcus (as it was to Judge Cooley), the specialty plate licensing

regime seeks not merely to cover its administrative costs but to raise revenue for a

wide array of public purposes. See supra at 15-16. Finally, as the district court

pointed out, the funds collected on top of the $8 reimbursement paid to the Tax

Commission do not purport to “regulate” anyone by incentivizing or

disincentivizing certain forms of conduct (like, say, controlling the overuse of state

parks).

Plaintiffs respond by asking us to look to the facts of M arcus rather more

than to the rule of law it applied. There, we held that Kansas assessments imposed

on drivers for a decal entitling them to use parking spaces reserved for the

physically disabled constituted a “fee” rather than a “tax under State law” for

purposes of the TIA. W e do not disagree that parking passes and specialty plates

sound alike. But the statutory regimes before us could not be more different.

Kansas chose to charge very little for handicap parking passes ($5.25) and

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explicitly mandated that the fees imposed by the Department of Revenue for the

placards “shall not exceed the actual cost of issuance.” Kan. Stat. § 8-1,125(c)

(1999). Thus, we emphasized in M arcus that the Kansas assessment “is expressly

tied to the administrative costs of a specific regulatory scheme and, therefore, its

essential character is regulatory.” M arcus, 170 F.3d at 1312. Here, by contrast,

the Oklahoma Legislature has created a statutory scheme whereby the vast bulk of

speciality license plates cost their purchasers approximately two and four times the

amount necessary to defray the costs of issuing the plates and excess funds are

applied to a variety of public purposes. W hile Oklahoma and Kansas faced a

similar issue in their vehicle registration regimes, they chose to address that issue

in radically different ways, ways the plain language of the TIA and our precedent

in M arcus bind us to find dispositive.

C

Even were we to look beyond the plain language and our controlling

precedent in interpreting “taxes under State law,” we find other indicia pointing us

in the direction of recognizing the Oklahoma assessments as taxes.

In recognition of the breadth of the plain meaning of the term Congress

employed, the Supreme Court has expressly instructed that the TIA is to be read as

a “‘broad jurisdictional barrier’” and is “first and foremost a vehicle ‘to limit

dramatically federal district court jurisdiction.’” Arkansas v. Farm Credit Servs. of

Centr. Ark., 520 U.S. 821, 825, 826 (1997) (quoting M oe v. Confederated Salish

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and Kootenai of Flathead Reservation, 425 U.S. 463, 470 (1976), and California v.

Grace Brethren Church, 457 U.S. 393, 408-09 (1982)). Thus, the Supreme Court

has gone so far as to hold that the TIA deprived it of jurisdiction even in cases

where the defendant State argued in favor of federal court review. See Grace

Brethren Church, 457 U.S. at 417 n.38. Given the Court’s direction, it would be

especially incongruous for us to defy the plain meaning of the term “tax” and our

precedent in M arcus to assert federal jurisdiction here.

The Supreme Court has also explained that the TIA serves an important role

in the smooth operation of our federal system. “The federal balance is w ell

served,” the Court has w ritten, “w hen the several States define and elaborate their

own laws through their own courts and administrative processes and without undue

interference from the Federal Judiciary. The States’ interest in the integrity of

their own processes is of particular moment respecting questions of state taxation.

In our constitutional system, . . . [t]he power to tax is basic to the power of the

State to exist [and the] . . . [e]nactment of the Tax Injunction Act of 1937 reflects a

congressional concern to confine federal court intervention in state government.”

Farm Credit Servs. of Cent. Ark., 520 U.S. at 826 (internal citation and quotation

marks omitted). To enjoin Oklahoma’s entire specialty plate regime (plaintiffs’

preferred remedy) or even to enjoin a portion of it (plaintiffs’ alternative remedy),

would deny Oklahoma the use of significant funds: the law generated

approximately $605,000 from the purchase of 33,000 special license plates issued

-20-
between A ugust 1, 2002, and July 31, 2003, alone. (Am. Compl. ¶ 126.) Doing so

would further operate to deny these funds to and thus disrupt a variety of state

initiatives, ranging from education to environmental to adoption programs, which

no party disputes serve legitimate and important state interests. Simply put, the

relief sought here would implicate exactly the sort of federalism problems the TIA

was designed to ameliorate.

The fact that the term “tax” is modified by the phrase “under State law” also

counsels in favor of holding the TIA applicable. Of course, we have held that how

a state labels an assessment does not resolve the question whether or not it is a tax

(a question Oklahoma has not asked us to revisit). M arcus, 170 F.3d at 1311. But

that does not mean that the phrase “under State law” is surplusage either; to the

contrary, Congress is presumed to have added these words for some purpose. TRW

Inc. v. Andrews, 534 U.S. 19, 31 (2001) (“It is a cardinal principle of statutory

construction that a statute ought, upon the whole, to be so construed that, if it can

be prevented, no clause, sentence, or word shall be superfluous, void, or

insignificant.” (internal quotation marks omitted)). And, in fact, it has long been

understood that taxes under State law can include many assessments that may not

be taxes for purposes of federal law.

Specifically, while the Constitution gave Congress the “Power to lay and

collect Taxes,” U.S. Const. art. I, § 8, this power is limited in several ways. It has

been debated, for example, whether the power to tax afforded by Article I can be

-21-
delegated by Congress to administrative agencies. See, e.g., National Cable

Television Ass’n, Inc. v. United States, 415 U.S. 336 (1974). Also, taxes must be

“uniform” under Section 8 of Article I and, thus, have to apply “‘with the same

force and effect in every place where the subject of it is found.’” Fernandez v.

Wiener, 326 U.S. 340, 359 (1945) (quoting Head M oney Cases (Edye v.

Robertson), 112 U .S. 580, 594 (1884)). Further, Article I, § 9 forbids Congress

from leveling direct or capitation taxes except in proportion to the census or

enumeration commanded by the Constitution. 9 Aware and perhaps because of these

limits, the Supreme Court has come to deem certain assessments as incidents of

congressional authority arising from sources other than the (limited) taxing power

discussed in Article I. Thus, for example, in National Cable Television

Association, the Court faced a statute that allowed the Federal Communications

Commission to prescribe, inter alia, a “fee, charge, or price, if any,” in order to

make the agency work self-sustaining. 415 U.S. at 337 (quoting 31 U.S.C. § 483a).

M indful of the canon of constitutional avoidance and anxious to “avoid

constitutional problems” that it perceived might exist if the statute were read to be

an (arguably impermissible) delegation of Congress’s taxing power to an

administration agency, the Court held that the “fee” was not a “tax” for Article I

purposes because it sought only to cover the costs of an associated administrative

9
The Sixteenth Amendment, of course, allows for the imposition of taxes on
income (though not other items) without regard to apportionment among the States
or to any census or enumeration.

-22-
regulation rather than aid in revenue raising. Id. at 340-41. Similarly, in the Head

M oney Cases, the Court faced an assessment authorized by Congress on vessels

bringing passengers from foreign ports. 112 U.S. at 594-95. The plaintiffs argued,

among other things, that the law ran afoul of the constitutional requirement that all

taxes be applied “uniformly” because it was directed only to persons entering the

country by ship, as opposed to by land or by rail. Id. at 594. To avoid such

potential constitutional difficulties, the Court held that the charge did not arise

from the taxing power of Article I, § 8 but instead was a “mere incident” of

Congress’s separate constitutional power to regulate commerce – what the Court

described as “that branch of foreign comm erce which is involved in immigration.”

Id. at 595; see also U.S. Const. art. I, § 8, cl. 3.

W hile the Supreme Court has limited what qualifies as an incident of the

taxing power for constitutional purposes, it has recognized that its rulings do not

necessarily resolve (or even implicate) the question what is a tax for other

purposes, such as “under State law.” As the Court put it in the Head M oney Cases,

sums demanded by the government may not be authorized pursuant to the “taxing

power” of the Constitution but may still be properly deemed taxes in “a loose and

more extended sense than was used in the [C]onstitution.” Id. at 596.

Indeed, in our system of government, States have powers reserved to them

that extend well beyond the powers of the national government. See U.S. Const.

amend. X. These powers include an independent and plenary taxing authority “in

-23-
the most absolute and unqualified sense.” The Federalist No. 32, at 199

(Alexander Hamilton) (Carl Van Doren ed., 1979). As exemplified by the

dictionary definitions, the plenary authority to tax under state law has historically

included a very wide array of extractions of property from private persons by a

sovereign for its use that may or may not be incidents of the rather more narrow

taxing authority granted in Article I. 10

D

Seeking to avoid the conclusion that the TIA bars their claims, M otorists

advance two additional arguments that require close attention.

1. M otorists contest the application of the TIA on the ground that they are

not seeking to challenge an assessment imposed on them, but rather assessments

imposed on and paid by other persons or entities. This, they argue, is an essential

and dispositive distinction under the Supreme Court’s teaching in Hibbs v. Winn,

542 U.S. 88 (2004). W e are constrained to disagree. Nothing in the language of

10
It bears mention that our holding is in harmony with that of the Fifth
Circuit. In addressing a challenge under the TIA to a specialty license plate
scheme in Louisiana, the Fifth Circuit held that the scheme involved “taxes under
State law ” because the funds collected from the program did not purport to
“‘regulate’” anything and “[a] dominant feature of the program, evidenced in over
half of the provisions authorizing specialty license plates, is to raise revenue.”
Henderson v. Stalder, 407 F.3d 351, 358 (5th Cir. 2005) (Jones, J.). Given that
Congress’s purpose in passing the TIA was to “prevent federal courts from
interfering with challenges to state and local revenue-raising measures,” the Fifth
Circuit was “unwilling to mischaracterize the Louisiana legislature’s
appropriations measures as ‘fees’ in order to achieve federal jurisdiction.” Id. at
358-59.

-24-
the TIA indicates that our jurisdiction to hear challenges to state taxes can be

turned like a spigot, off when brought by taxpayers challenging their own liabilities

and on when brought by third parties challenging the liabilities of others. Rather,

Congress plainly directed us that w e “shall not enjoin . . . any tax under State law,”

without qualification – and nothing in Hibbs commands a result contrary to the

Congress’s express direction.

To be sure, the Supreme Court in Hibbs faced a plaintiff who sought to

challenge the validity of tax credits provided to third parties. And in addressing

the defendant’s assertion that the TIA barred the plaintiff’s claim, the Court did

point out that TIA cases typically involve challenges brought by state taxpayers

seeking to avoid their own state tax liabilities. Id. at 107-08. But the Court did so

not to criticize extant lower court decisions holding that the TIA bars challenges

brought by third parties to State law taxes. 11 Instead, the Court simply sought to

underscore how unusual the case before it w as compared with most TIA suits.

Indeed, the C ourt proceeded to hold that the essential problem with defendant’s

assertion that the TIA barred the suit before it lay in the fact that the plaintiff there

simply did not seek to enjoin the levy or collection of any tax under State law , as is

typically the case, but instead sought to challenge the provision of a tax credit

11
See, e.g., Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 132 (4th Cir.
2000) (TIA barred challenge by landfill owners and waste transportation companies
to a tax imposed on persons disposing of solid waste at landfills; no distinction
made between transport company upon whom the tax was imposed and landfill
owners merely required to collect tax).
-25-
aimed at limiting or constraining State tax revenues. Hibbs, 542 U.S. at 95.

Simply put, the Court held that giving away a tax credit is a very different thing

than assessing, levying or collecting a tax.

The Court explained that the “moorings” of the TIA rest on a “state-revenue-

protective” rationale. Id. at 106. See also id. at 105 (emphasizing the protection of

“the collection of revenue” as key impulse in the Court’s jurisprudence); id. at 106

(noting that prior decision enforcing the TIA was appropriate because “[f]ederal-

court relief . . . would have operated to reduce the flow of state tax revenue”). It

then proceeded to hold that a challenge brought to a tax credit does not implicate

this core concern precisely because the entry of the relief sought by the plaintiffs –

the elimination of a tax credit – is not an attack on a State measure aimed at raising

revenue. See id. at 108-09. W hile the TIA embodies an articulated concern about

protecting State revenue raising efforts, it simply does not reflect any such concern

“about federal courts’ flogging state and local governments to collect additional

taxes.” Id. at 109 (quoting Dunn v. Carey, 808 F.2d 555, 558 (7th Cir. 1986)). Our

case, of course, does not involve the somewhat unusual circumstance confronted by

Hibbs of citizens seeking to eliminate tax credits and “flog” the State to collect

more tax revenues, but instead falls in the traditional heartland of TIA cases – an

-26-
effort expressly aimed at preventing the State from exercising its sovereign power

to collect certain revenues. 12

Plaintiffs respond that enjoining Oklahoma from collecting revenues from

the Choose Life, Adoption Creates Families, and other specialty license plates

specifically authorized by statute might not reduce state revenues. After all, they

say, motorists would remain free to apply for specialty plates under the

legislature’s 2005 “all comers” law allowing any group with 500 prepaid

applications to obtain a plate of their liking. Plaintiffs’ submission here, however,

is curiously in tension with their response to defendants’ mootness argument.

There, plaintiffs contended that the legislature’s new rule requiring 500 prepaid

applications for new specialty plates is considerably more onerous than the

legislature’s preexisting scheme immediately approving certain plates for issuance.

Here, by contrast, plaintiffs seem to suggest that an injunction against the old

legislative regime would result in no net revenue loss for the State because a one-

for-one substitution would take place – with motorists simply migrating from the

old to the new licensing regime.

In any event, there is simply nothing in the TIA or Hibbs suggesting that

federal courts can entertain challenges to state taxes on the basis of predictive

judgments that doing so will not harm state coffers; rather our jurisdiction is

12
As with our reading of the TIA, our understanding of Hibbs accords w ith
the views expressed by the Fifth Circuit in its decision in Henderson. See 407 F.3d
at 359.
-27-
precluded by the plain language of the TIA in all cases seeking to enjoin the levy

or collection of taxes under State law. W ere the case otherwise, judges might be

free to become second rate, supply-side economists, hazarding guesses that

enjoining this or that revenue raising measure would help rather than hurt overall

tax collections. But we are not authorized by Congress to be in the business of

forecasting the likely fiscal effects of variations on state tax policy; nor do we

think ourselves well equipped to do so.

2. Picking up on an idea recently advanced by the Sixth Circuit, plaintiffs

seek in their reply brief, and in a notice pursuant to Federal Rule of Appellate

Procedure 28(j), to supplement their “fee rather than tax” and Hibbs-based

arguments with a new, alternative contention. Now they seek to argue that

Oklahoma’s assessment is not a tax (or a fee) because it is a mere contractual

exchange of money for a commodity. (See Appellant’s Reply Br. at 16-19;

Appellant’s Supp. Auth. (filed April 10, 2006).) 13

It is our general rule, however, that arguments and issues presented at such a

late stage are waived. See Bowdry v. United Airlines, Inc., 58 F.3d 1483, 1490

(10th Cir. 1995) (citing, inter alia, Headrick v. Rockwell Int’l Corp., 24 F.3d 1272,

1278-79 (10th Cir. 1994) (W hite, J.)); accord Herbert v. Nat’l Academy of

13
See, e.g., Appellant’s Reply Br. at 16 (“M otorists’ opening appellate brief
explains at length why the amounts paid to purchase special plates are fees (not
taxes) and are thus not implicated by the TIA. However, even if M otorists are
wrong and the amounts are not fees, it does not follow that the amounts necessarily
must be taxes.”).

-28-
Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992) (declining to decide new argument

that statute did not take away jurisdiction from the court, explaining that “[w]hile

courts always must decline to decide cases over which they have no power, the

converse of that rule does not hold: Article III tribunals are not absolutely bound

to render judgment on every argument over which they obtain jurisdiction”). A s

we have explained, the reasons for our rule are two-fold: “First, to allow an

appellant to raise new arguments at this juncture would be manifestly unfair to the

appellee who, under our rules, has no opportunity for a written response. . . .

Secondly, it would also be unfair to the court itself, which, without the benefit of a

response from appellee to an appellant’s late-blooming argument, would run the

risk of an improvident or ill-advised opinion, given our dependence as an Article

III court on the adversarial process for sharpening the issues for decision.”

Headrick, 24 F.3d at 1278 (internal quotation marks omitted).

Of course, our rule against entertaining new arguments in reply in no way

precludes us from supplementing the contentions of counsel through our own

efforts. Id. But neither does it compel us to undertake such self-directed research

or pursue late and undeveloped arguments, and we exercise caution in doing so,

especially in complex cases where (as here) highly competent counsel have

represented the parties throughout all stages of the proceedings. Our system of

justice, after all, is not a self-directed inquisitorial one; to avoid error, we are

dependent on the full development of issues through the adversarial process and the

-29-
initial testing of ideas in trial courts w here advocates have an opportunity to

present more than thin briefs and fifteen minute oral arguments. For these reasons,

we need not and do not issue any holding on plaintiffs’ contractual exchange

argument and leave a final decision on this score for another day.

Just how complex and difficult the new argument plaintiffs ask us to address,

and thus the reason for our particular reluctance to decide it with finality, is worth

pausing to underscore. Plaintiffs borrow their new submission from ACLU of

Tennessee v. Bredesen, 441 F.3d 370, 373 (6th Cir. 2006), cert. denied __ U.S. __,

126 S.Ct. 2972 (June 26, 2006), a recent decision in which our sister court rejected

the notion that a governmental assessment must either be a tax or a fee – the very

dichotomy plaintiffs have urged courts to adopt throughout the proceedings in this

circuit. (Appellant’s Opening Br. at 23-28.) Rather, the Sixth Circuit held that

Tennessee’s statutory regime for specialty license plates “creates contractual debts

to pay but imposes no tax. Instead of using its sovereign power to coerce sales,

Tennessee induces willing purchases as would any ordinary market participant.”

Id. at 374. 14

14
The Sixth Circuit itself relied in substantial part on a recent dissent from denial
of rehearing en banc in the Fifth Circuit. Henderson v. Stalder, 434 F.3d 352, 353 (5th
Cir. 2005) (Davis, J., dissenting from denial of rehearing en banc). And though the Sixth
Circuit overcame the TIA hurdle in its case, the end result there was no different than it is
here – the Sixth Circuit still dismissed plaintiffs’ claims on a motion to dismiss, albeit one
directed to the merits of the constitutional claims. Bredesen, 441 F.3d at 375-80.

-30-
 W hile we do not for a moment doubt that the State can obtain funds through

means other than “taxes” and “fees,” 15 whether plaintiffs’ assertion that

Oklahoma’s issuance of specialty plates amounts to nothing more than an ordinary

market sales contract is far from clear. The Bredesen court relied on two particular

factors in holding that the license plate charge w as not a tax: (1) a motorist

voluntarily pays the charge, and (2) the State acts as “an ordinary market

participant.” 441 F.3d at 374. The court noted that these two factors “apply a

fortiori to ordinary purchases, like the purchase of government bonds, or the

purchase of a souvenir at a state park gift store. Such purchase payments can

hardly be termed ‘taxes’ as opposed to ordinary payments on voluntary contracts.”

Id.

But, starting with the latter consideration, we are unaware of anything

approaching an “ordinary market” for specialty license plates, at least in

Oklahoma. Quite unlike the (some might say over-) active market for souvenir

snow globes sold in state park gift shops, the State brooks no competitors in the

supply of specialty license plates. As sovereign, it exercises exclusive (monopoly)

15
It seems to us that Bredesen is absolutely right insofar as it recognized that the
tax-fee dichotomy arose in a different context to answer a different question than that
posed by the TIA. 441 F.3d at 374. But the dichotomy arose originally not from any
circuit court opinion (as Bredesen suggests); instead, it seems to have originated in the
Supreme Court’s decision in National Cable Television Association, 415 U.S. 336. That
case, of course, had nothing to do with the scope of the term “tax under State law” in the
TIA, but was, as we have discussed, one in which the Supreme Court strained to place the
FCC’s authority to impose certain assessments outside the constitutional taxing power of
Article I, § 8 in order to avoid what it perceived to be a potentially nettlesome non-
delegation problem. See supra at 22-23.
-31-
power to issue those items. See generally 47 Okla. Stat. § 1113; see also Cooley,

supra, at 72 (taxation is “the exercise of the sovereign power to raise a revenue”).

Citizens cannot purchase specialty plates from some other source, affix them to the

rear of their cars, and motor down the highway – at least without the substantial

risk of incurring something substantially worse than either a tax or a fee. 16 From

the pleadings before us, moreover, it appears that the marginal cost of specialty

plates does not exceed $8 (Am. Compl. ¶ 65), 17 and we know that in the

competitive market for bumper stickers one can find virtually any message ready to

be affixed to the back of a car for substantially less money still. 18 The fact that

Oklahoma is able, under these circumstances, to charge up to $35 for a specialty

plate bearing a simple message calls into question whether ordinary market

conditions really prevail in the sale and purchase of specialty license plates.

16
See 47 Okla. Stat. § 1151(A)(2) (making criminal the alteration of a license
plate); id. § 1151(A)(5) (criminalizing the operation of a vehicle without a proper license
plate or with a plate for which all taxes have not been paid).

17
“In a perfectly competitive market, retail prices drop instantly to the
marginal cost of the most efficient company.” Verizon Comms., Inc. v. FCC, 535
U.S. 467, 505 (2002) (citing N. Gregory M ankiw , Principles of Economics 283-
288, 312-313 (1998)).
18
For example, http://www.stickergiant.com (last visited M arch 2, 2007)
offers thousands of different bumper stickers, most for under $3. Stickers w ith
slogans supporting abortion rights, such as “Pro Child Pro Choice”or “Keep Your
Laws Off M y Body” can be purchased for $2.99. Stickers demonstrating the
opposite view, such as “It Is Not a Choice, It Is a Child,” can be purchased for the
same price.

-32-
 W e are also uncertain w hether the fact that the transaction to purchase

specialty plates (as opposed to ordinary plates) may be “voluntary” dictates that the

accompanying supracompetitive charge is not a tax. On the one hand, the

prevailing definition of tax in existence at the time that the Tax Injunction Act was

enacted contemplated that taxes are involuntary in nature. See supra at 14-17.

And, in this case, the extra charge is for a discretionary product that the state is

offering, and it is purely up to the consumer to decide w hether to buy it. The extra

words on the specialty plate are not necessary to exercise the privilege regulated by

the state – i.e., driving. The basic $15 charge covers the privilege of driving, and

the incremental cost may simply be a commercial price paid by a willing motorist

to purchase a license plate with a slogan that is pleasing to the motorist.

On the other hand, private citizens routinely incur different levels of

compulsory taxation based on the voluntary choices they make. Thus, for example,

in addition to the normal taxes one pays when purchasing a new car, a higher

“luxury” tax may be incurred by those buyers who choose a particularly expensive

vehicle. See, e.g., 26 U.S.C. § 4001(a) (1991). Those who incur this luxury tax do

so “voluntarily” in the same sense that those who purchase specialty license plates

bearing some preferred message do so “voluntarily.” That is, just as the Cadillac

owner who chooses a fancier car foresees that he or she will also have to pay an

additional (compulsory) assessment to the state, a motor vehicle owner who

chooses to display a specialty plate in Oklahoma know s that he or she must pay the

-33-
sovereign an additional (compulsory) sum for that privilege. The fact that the

transaction in either case is voluntarily undertaken with full foresight of the

inevitable (and most certainly not bargained for or voluntarily chosen) assessment

makes the assessment involved no less a tax. Indeed, though our car-oriented

culture may make it sometimes seem otherwise, the very decision to purchase and

drive a car is itself a voluntary one (no one is forced to have a car, after all) and it,

too, forseeably involves the payment of a sales tax and a tax for even a basic

license plate. So it is that a very great many taxes w e are every day compelled to

pay are a result of our voluntary decisions (the decision to work harder this year

and perhaps risk a higher income tax bracket, the decision to purchase a home

rather than rent and thus incur real estate taxes, etc.). As the Fifth Circuit put the

point in the process of rejecting the very analysis advanced by the plaintiffs before

us in their reply brief: “Any party who pays special assessments to the government

does so ‘voluntarily’ in order to engage in particular activity, whether that activity

is homebuilding, engaging in a regulated industry or obtaining permission to park

in handicapped spots.” Henderson, 407 F.3d at 358. One thus simply cannot

meaningfully distinguish taxes from “ordinary market transactions” on the basis of

a taxpayer’s intent. Accord id. (holding that it is “not the taxpayer’s motivation”

that distinguishes taxes from other transactions).

-34-
 E

Having concluded that the Oklahoma specialty license plate assessments

qualify as “taxes under State law ,” our analysis under the TIA remains still

unfinished. Before declining federal jurisdiction, the statute requires us to decide

whether Oklahoma affords a “plain, speedy and efficient” remedy in its courts for

those seeking to challenge its taxes. 28 U.S.C. § 1341. “[I]f the state provides

adequate procedural due process to allow a taxpayer to raise any constitutional

objections, then the state has done all that is required under the Tax Injunction Act,

and as a consequence, the federal courts are foreclosed from hearing such a tax

challenge.” ANR Pipeline Co. v. Lafaver, 150 F.3d 1178, 1192 (10th Cir. 1998)

(citing California v. Grace Brethren Church, 457 U.S. 393, 412-13 (1982)). If

state courts fail to afford such due process, however, the doors to federal court

remain open to ensure an adequate forum for the dispute.

W e have heard no convincing reason to suppose that Oklahoma fails to

provide its citizens sufficient process for challenging its tax laws; very much to the

contrary. In addition to affording a general right to protest taxes before the Tax

Commission, see generally 68 Okla. Stat. §§ 201, et seq., Oklahoma has

specifically created “a right of action . . . to afford a remedy to a taxpayer

aggrieved by the provisions of this article or of any other state tax law.” 68 Okla.

Stat. § 226(a) (emphasis added). The provision creates “a legal remedy and a right

of action” in any case where a party claims, inter alia, that “the collection thereof

-35-
[is] violative of any Congressional Act or provision of the Federal Constitution.”

Id. § 226(c). 19 M otorists provide no reason why they cannot avail themselves of

these provisions, nor do they respond to the defendants’ argument that this

provision ensures them a speedy, efficient, and fair hearing.

Oklahoma law also specifically provides that parties may apply for and

receive injunctive and declaratory relief as against unlawful taxes, exactly the sort

of relief M otorists seek here. See 12 Okla. Stat. § 1397 (“An injunction may be

granted to enjoin the enforcement of a void judgment, the illegal levy of any tax,

charge or assessment, or the collection of any illegal tax, charge or assessment, or

any proceeding to enforce the same; and any number of persons w hose property is

affected by a tax or assessment so levied may unite in the petition filed to obtain

such injunction.”) (emphasis added); see also id. §§ 1651-57. In their brief,

M otorists purport to quote Section 1397 as allowing an injunction only with respect

to “the collection [from them] of any illegal tax, charge or assessment.”

(Appellant’s Opening Br. at 29.) W ith their addition of the bracketed language,

M otorists argue that Section 1397 applies only to taxpayers challenging the

collection of taxes levied against them and not to third party challenges such as the

one they seek to pursue. But the statute simply does not contain the language the

19
That this provision also purports to allow such actions in federal court as
well as state court, see 68 Okla. Stat. § 226(c), does not affect our jurisdictional
analysis, as the O klahoma Legislature obviously cannot usurp Congress’s
prerogative in expanding or contracting the scope of a federal court’s jurisdiction.

-36-
M otorists complain about (and themselves add), and we have been offered no

reason to suppose that Oklahoma courts w ill interline the plain words of the statute

in this fashion.

III

In claims five and six, ORC challenges not the collection of any tax but the

manner in w hich money is distributed from the Choose Life Assistance Program.

ORC argues in these remaining claims that the State impermissibly denies it the

opportunity to receive monies from the Choose Life Assistance Program based

solely on its viewpoint, in violation of the First and Fourteenth Amendments.

M ore specifically, the Choose Life Assistance Program directs monies to groups

that counsel “pregnant women who are committed to placing their children for

adoption.” 47 Okla. Stat. § 1104.6(C)(3). ORC indicates that it would like to

offer such counseling services to women and has applied for funding to do so, but

that its applications have been denied due to a statutory restriction preventing the

disbursement of program funds to organizations that are also “associated with any

abortion activities.” 20 Id. § 1104.6(C)(4); see also id. § 1104.6(D). ORC contends

20
We identified a potential ripeness concern with counts five and six. The
operative complaint states merely that “ORC would like to apply for funding pursuant to
47 Okla. Stat. § 1104.6,” not that ORC had ever so applied. (Am. Compl. ¶ 27 (emphasis
added).) Had ORC not given DHS the opportunity to consider an application for
disbursement under the Choose Life Assistance Program, we would have had serious
concerns about whether we were being called upon to determine a case based upon an
event which may not happen at all. What if ORC did apply and DHS, if against all the
odds, granted the application? At oral argument, however, both parties informed us the
ORC has applied for funding from the Choose Life Program Fund in fiscal years 2006
(continued...)
-37-
that this restriction amounts to an “unconstitutional condition” on the exercise of

its First Amendment rights. Defendants respond, and the district court held, that

the Eleventh Amendment immunizes them from such a claim. 21

A

The Eleventh Amendment provides that

[t]he Judicial power of the United States shall not be construed to extend to
any suit in law or equity, comm enced or prosecuted against one of the
United States by Citizens of another State, or by Citizens or Subjects of any
Foreign State.

U.S. Const. amend. XI. By its plain terms, nothing in the Amendment would

appear to bar ORC’s claims as they involve purely an intrastate matter – ORC

claims to be a non-profit organization located in Oklahoma (Am. Compl. ¶¶ 20-

21), and it seeks to sue only its own sovereign state. But the plain terms of the

Amendment have been much embroidered. The Supreme Court in Hans v.

Louisiana, 134 U.S. 1 (1890), long ago instructed inferior federal courts that the

20
(...continued)
and 2007, and that DHS has denied its applications for the very reason that forms the
basis of claims five and six – that is, because ORC is associated with abortion activities.
The parties thereafter supplemented the record before us with copies of ORC’s
applications and DHS’s denials. We are thus satisfied that ORC’s claims are indeed
properly before us.

21
Certain of the defendants argue in a footnote that claims five and six are
also barred by the TIA because the relief sought with respect to those claims also
implicates the State’s tax collection power. (Tax Commission Defendants’ Resp.
Br. at 44 n.12.) W e w ill not consider an argument raised in such a perfunctory
manner. See United States v. Hardman, 297 F.3d 1116, 1131 (10th Cir. 2002);
accord Hardeman v. City of Albuquerque, 377 F.3d 1106, 1122 (10th Cir. 2004)
(issue raised only in footnote before trial court deemed waived).

-38-
A mendm ent should be read to preclude even suits by a citizen against its own

sovereign state; “‘inherent in the nature of sovereignty,’” Hans held, “‘is the right

not to be amenable to the suit of an individual without its consent.’” Id. at 13

(quoting The Federalist No. 81, at 547 (Alexander Hamilton) (Carl Van Doren ed.

1979)). Though the Court has sometimes criticized Hans and more than once

considered overruling it, 22 Hans remains the law.

The Supreme Court has, however, issued a series of rulings limiting Hans’s

reach. Perhaps the most significant, and the one most relevant for our purposes, is

Ex parte Young, 209 U.S. 123 (1908). In Ex parte Young, the Court held that the

Eleventh Amendment generally will not operate to bar suits so long as they (i)

seek only declaratory and injunctive relief rather than monetary damages for

alleged violations of federal law , and (ii) are aimed against state officers acting in

their official capacities, rather than against the State itself. Young’s effort to

alleviate the effect of Hans, however, itself contains some logical curiosities of its

own. Young proceeds on the admitted fiction that a suit seeking an injunction

against a state employee seeking to do his or her job is (somehow) different in

substance than a suit against the state itself. Pennhurst State Sch. & Hosp. v.

22
See, e.g., Pennsylvania v. Union Gas Co., 491 U.S. 1, 31-35 (1989) (Scalia, J.,
concurring and dissenting); Welch v. Tex. Dep’t of Highways & Public Transp., 483 U.S.
468, 495-96 (1987) (Scalia, J., concurring); id., at 519-21 (Brennan, J., dissenting);
Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 298-302 (1985) (Brennan, J.,
dissenting). See also Carlos Manuel Vázquez, What is Eleventh Amendment Immunity?,
106 Yale L.J. 1683, 1694 n.42 (1997) (collecting scholarly criticism of Hans).

-39-
Halderman, 465 U.S. 89, 105 (1984) (noting the “fiction of Young”). 23 It also

proceeds on the related assumption that the state employee is somehow engaging

in something other than state action for purposes of the Eleventh Amendment yet

is engaging in sufficient state action for purposes of the Fourteenth Amendment to

provide us with jurisdiction; after all, we can enforce a constitutional right only as

against state, not private, action. See id.; Virginia v. Rives, 100 U.S. 313, 318

(1879). Young further commands us to afford federal jurisdiction to federal claims

even when a competent state forum stands ready and able to adjudicate those

claims; indeed, the presence or absence of a state forum simply does not enter into

the Young equation. 24

Adding to the rococo quality of Eleventh Amendment jurisprudence, the

Supreme Court has in recent years added a new gloss on Young’s gloss on Hans’s

gloss on the Eleventh Amendment. First, in 1996, the Court held that Young suits

23
See also Kenneth C. Davis, Suing the Government by Falsely Pretending to Sue
an Officer, 29 U. Chi. L. Rev. 435 (1962) (“You may get relief against the sovereign if,
but only if, you falsely pretend that you are not asking for relief against the sovereign.
The judges often will falsely pretend that they are not giving you relief against the
sovereign, even though you know and they know, and they know that you know, that the
relief is against the sovereign.”).

24
But see Young, 209 U.S. at 176 (Harlan. J., dissenting) (criticizing majority for
failing to recognize that “[w]e must assume – a decent respect for the states requires us to
assume – that the state courts will enforce every right secured by the Constitution”);
Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 270-74 (Kennedy, J.) (arguing that
Young has special significance where no state forum available); id. at 276 (“It would be
error coupled with irony were we to bypass the Eleventh Amendment, which enacts a
scheme solicitous to the States, on the sole rationale that state courts are inadequate to
enforce and interpret federal rights in every case.”).

-40-
are not available where Congress “has prescribed a detailed remedial scheme for

the enforcement against a State of a statutorily created right.” Seminole Tribe of

Fla. v. Florida, 517 U.S. 44, 74 (1996). That is, “federal courts are not free to

imply the wide-ranging, judge-made remedial doctrine of Ex parte Young when

Congress has seen fit to craft a significantly narrower statutory remedy.” ANR

Pipeline Co. v. Lafaver, 150 F.3d 1178, 1189 (10th Cir. 1998). A year later, the

Court instructed that Young may not be rotely applied; instead, low er courts “must

ensure that the doctrine of sovereign immunity remains meaningful, while also

giving recognition to the need to prevent violations of federal law.” Coeur

d’Alene, 521 U.S. at 269. The Court added that

[t]o interpret Young to permit a federal-court action to proceed in every case
where prospective declaratory and injunctive relief is sought against an
officer, named in his official capacity, would be to adhere to an empty
formalism and to undermine the principle . . . that the Eleventh Amendment
represents a real limitation on a federal court’s federal-question jurisdiction.

Id. at 270. As the Court put it, the “real interests served by the Eleventh

Amendment are not to be sacrificed to elementary mechanics of captions and

pleadings.” Id.; see also Alden v. M aine, 527 U.S. 706, 756-57 (1999).

In the suit before us, defendants do not dispute that claims five and six meet

the Ex parte Young formalisms – that is, those claims seek prospective relief, no

damages, and are directed (at least nominally) against state officials rather than

the State of Oklahoma itself. Instead, defendants urge us to dismiss this suit on

the basis of the new gloss added to Young by Coeur d’Alene. But this only raises

-41-
the questions: W hat exactly did Coeur d’Alene do to the state of the Supreme

Court’s Ex parte Young jurisprudence? 25 And what does Coeur d’Alene mean for

this case?

Coeur d’Alene involved multiple and fractured opinions. Justice Kennedy

wrote the lead opinion but commanded a majority with respect only to certain

sections. W hen it came to the key question how lower courts should change their

analyses under Ex parte Young, Justice Kennedy wrote for just himself and Chief

Justice Rehnquist to suggest a “case-by-case approach” in which lower courts

should “reflect a sensitivity” to a “broad” range of questions ranging from the

nature and significance of the federal rights at stake, the state interests implicated

by the lawsuit, and the availability of a state forum. 521 U .S. at 280. Federalism

and comity interests, Justice Kennedy wrote, should receive consideration in every

case. Id. at 278-280. Turning to the specific matter before him, in which the

Coeur d’Alene Tribe of Idaho sought a declaratory judgment action to establish its

entitlement to exclusive use and occupancy of submerged lands under Lake Coeur

25
As one critic has put it, “The most unsettled aspect of the newly developing law
[regarding the Eleventh Amendment] is the effect of Coeur d’Alene Tribe.” John H.
Clough, Federalism: The Imprecise Calculus of Dual Sovereignty, 35 J. Marshall L. Rev.
1, 4 (2001); see also Laurence H. Tribe, American Constitutional Law 566 (3d ed. 2000)
(“The meaning of . . . Coeur d’Alene for Ex parte Young is a matter of great debate
among commentators.”) (collecting articles); Carlos Manuel Vázquez, Night and Day:
Coeur d’Alene, Breard, and the Unraveling of the Prospective-Retrospective Distinction
in Eleventh Amendment Doctrine, 87 Geo. L.J. 1, 42 (1998) (“Exactly what the Court
held [in Coeur d’Alene], and thus how radically it changed [Eleventh Amendment]
doctrine, is a matter of some dispute.”) (hereinafter “Vázquez”).

-42-
d’A lene, Justice Kennedy wrote that the law suit sought to “divest the State of its

sovereign control over submerged lands, land with a unique status in the law and

infused with a public trust the State itself is bound to respect.” Id. at 283. After

balancing the competing federal and state interests at stake, and acknowledging

the ready availability of a state forum to hear the dispute, Justice Kennedy

concluded that “[t]he dignity and status of its statehood allow[ed] Idaho to rely on

its Eleventh Amendment immunity and to insist upon responding to these claims

in its own courts.” Id. at 287-88.

Justice O’Connor wrote separately for herself and Justices Scalia and

Thomas to express disagreement with this “reformulation” of Ex parte Young. See

521 U.S. at 296. Justice O’Connor worried that Justice Kennedy’s approach

would replace “a straightforward inquiry” under Ex parte Young with a “vague

balancing test that purports to account for a ‘broad’ range of unspecified factors.”

Id. And, as with the balancing of federal and state interests, Justice O’Connor

appeared to reject the notion that the availability (or unavailability) of a state

forum should play any role in our Eleventh A mendment analysis under Young. Id.

at 292; see also supra at note 24. Yet, Justice O’Connor joined Justice Kennedy

in holding that the plaintiff’s suit should be dismissed despite its seeming

compliance with Ex parte Young’s formalisms. Her precise reason for doing so,

however, is not free from dispute. 26 It appears that Justice O’Connor modified Ex

26
See Vázquez, supra note 25; Eric B. Wolff, Coeur d’Alene and Existential
(continued...)
-43-
parte Young slightly by expanding what constitutes impermissible retrospective

relief. Though the Tribe’s claim was formally pled as an action for declaratory

and injunctive relief, Justice O’Connor noted that its request for a declaration that

the State did not own the submerged lands at issue was really, in substance,

tantamount to a request to transfer title over huge tracts of lands, a form of relief

much akin to a (significant) retroactive monetary judgment and not at all like a run

of the mill Ex parte Young suit seeking to bar the future implementation of

regulations issued by a state regulatory body. Id. at 291. 27 Thus, Justice

O’Connor seemed to suggest that we must assess whether a claim seeks relief

effectively equivalent to a retrospective judgment regardless of how it is formally

pled or denominated.

B

As the narrower approach commanding the fifth vote, w e have previously

acknowledged that Justice O’Connor’s opinion provides the controlling guidance

for lower courts and sought to apply that approach, as best we understood it, in

26
(...continued)
Categories for Sovereign Immunity Cases, 86 Cal. L. Rev. 879, 916 (1998) (discussing
Antonin Scalia, Sovereign Immunity and Nonstatutory Review of Federal Administrative
Action: Some Conclusions from the Public-Lands Cases, 68 Mich. L. Rev. 867 (1969),
and Louis L. Jaffe, Suits Against Government and Officers: Sovereign Immunity, 77 Harv.
L. Rev. 1 (1963)).

27
Ex parte Young, like many suits in which the doctrine it set forth has been
applied, involved a suit against state officers seeking to enjoin enforcement of a utility
commission order that allegedly violated federal law. 209 U.S. at 129.

-44-
ANR Pipeline. 150 F.3d at1190. There, we wrote that “[i]n light of Coeur d’Alene

Tribe, federal courts must examine whether the relief being sought against a state

official ‘implicates special sovereignty interests.’ If so, we must then determine

whether that requested relief is the ‘functional equivalent’ to a form of legal relief

against the state that would otherw ise be barred by the Eleventh Amendment,”

such as a retrospective money judgment. Id.

After our decision in ANR Pipeline, however, the Supreme Court in Verizon

M aryland v. Public Service Com mission of M aryland, 535 U.S. 635 (2002), had

occasion to return to this area. There, the Supreme Court review ed a Fourth

Circuit decision articulating an approach to sovereign immunity that closely

tracked our approach in ANR Pipeline:

[T]o determine w hether Ex parte Young authorizes this suit against
State officials, we must evaluate the federal interests served by
permitting a federal suit against individual members of the M aryland
Public Service Commission, taking into account the remedial scheme
for enforcement of federal law that Congress has established in the
Telecommunications A ct of 1996. Then, with those federal interests
understood, we must determine whether the federal suit would unduly
sacrifice the important value of M aryland’s sovereign immunity.

Bell Atlantic M d. v. M CI WorldCom Inc., 240 F.3d 279, 295 (4th Cir. 2001), rev’d

by Verizon M d., 535 U.S. at 648.

The Supreme Court reversed. In doing so, a clear majority of the Supreme

Court followed Justice O’Connor’s approach in Coeur d’Alene and instructed

lower courts definitively that “[i]n determining whether the doctrine of Ex parte

Young avoids an Eleventh Amendment bar to suit, a court need only conduct a
-45-
‘straightforward inquiry into whether [the] complaint alleges an ongoing violation

of federal law and seeks relief properly characterized as prospective.’” Verizon

M d., 535 at 645 (quoting Coeur d’Alene, 521 U.S. at 296 (O ’Connor, J.,

concurring)). Emphasizing the importance of the adverb “properly” and that

formal pleading titles do not necessarily control, the Court explained that, in the

case before it, “no past liability of the State, or of any of its commissioners, is at

issue. [The lawsuit] does not impose upon the State a monetary loss resulting

from a past breach of a legal duty on the part of the defendant state officials. . . .

Insofar as the exposure of the State is concerned, the prayer for declaratory relief

adds nothing to the prayer for injunction.” Id. at 646 (internal citations and

quotation marks omitted).

The Supreme Court’s formulation of Coeur d’Alene in Verizon M aryland is

thus somewhat different from what we had understood it to be in ANR Pipeline. In

rejecting the Fourth Circuit’s analysis, the Supreme Court in Verizon M aryland

clarified that the courts of appeals need not (and should not) linger over the

question whether “special” or other sorts of sovereign interests are at stake before

analyzing the nature of the relief sought. Thus, to the extent that our decision in

ANR Pipeline read Coeur d’Alene as requiring “federal courts [to] examine

whether the relief sought against a state official ‘implicates special sovereignty

interests,’” 150 F.3d at 1190, we recognize today that Verizon M aryland abrogated

this step. Instead, the Supreme Court has instructed that we are to proceed

-46-
immediately in every case to the “straightforward [or so one might hope] inquiry”

whether the relief requested is “properly” characterized as prospective or is indeed

the functional equivalent of impermissible retrospective relief. Verizon M d., 535

U.S. at 645; see also Republic of Paraguay v. Allen, 134 F.3d 622, 628-29 (4th

Cir. 1998) (reading Coeur d’Alene as requiring lower courts to analyze whether

relief sought is the “‘functional equivalent’” of retrospective relief

“notwithstanding [the fact that the] claimed violation was continuing and the relief

sought w as only prospective in nature”).

Following the Supreme Court’s most recent and definitive guidance in

Verizon M aryland, the sole question for us becomes whether the relief sought by

ORC is prospective, not just in how it is captioned but also in its substance. The

State appears to wish the law were otherwise, pursuing arguments that track to a

significant degree the sort of case-specific analysis of the state interests at stake

that the Fourth Circuit pursued in Verizon M aryland. But we are bound by the law

as it is, not as one might wish it to be. And Verizon M aryland has done much to

make clear(er) the law that binds us.

W ith the dismissal of claims one through four, the only remaining relief

sought by ORC relates to the statutory provisions prohibiting disbursement to

organizations w hich engage in abortion-related activities, that is 47 Okla. Stat.

§ 1104.6(C)(4) and (D). Specifically, ORC seeks (i) a declaration that prohibiting

the distribution of monies from the Choose Life Assistance Program based on

-47-
abortion-related speech is unconstitutional; (ii) an injunction to stop the

Defendants from enforcing 47 Okla. Stat. § 1104.6(C)(4) and (D), which prohibit

distribution to such organizations; and (iii) severance of those subsections from

the rest of the statute. (Am. Compl. ¶ 166.) By its terms, ORC’s complaint does

not seek a money judgment for any past alleged infractions of federal law. Neither

does it seek to impose any constraints on the State’s ability to decide which

specialty license plates to allow or disallow. Nor does it seek to dictate which

programs the State may choose (or not choose) to fund with revenues from its

specialty license plate scheme. Nothing in ORC’s suit calls to mind the sort of

literal land grab effort made by the plaintiffs in Coeur d’Alene with its consequent

significant implications on the state fisc. 28 Viewing the facts in the light most

favorable to ORC, we are unable to conclude that, were ORC to prevail,

Oklahoma’s specialty license plate program would be any less financially

lucrative for the State, or that the State would be inhibited in any of its funding

options, including its decision to collect and spend revenues in aid of adoption

activities through the Choose Life Assistance Program. Instead, akin to Ex parte

28
Lower courts that have found Coeur d’Alene applicable have involved just such
circumstances. See, e.g., Western Mohegan Tribe & Nation v. Orange County, 395 F.3d
18 (2d Cir. 2004) (claiming that the State of New York was wrongfully in possession of
10 counties); Ysleta Del Sur Pueblo v. Laney, 199 F.3d 281 (5th Cir. 2000) (seeking to
eject state officers from piece of real property); MacDonald v. Vill. of Northport, Mich.,
164 F.3d 964 (6th Cir. 1999) (seeking declaration that right-of-way that provided access
to navigable waterway was the lawful property of plaintiffs).

-48-
Young and Verizon M aryland, ORC’s injunction claim seeks to preclude only the

future enforcement of one aspect of a complex regulatory scheme, and its claim

for declaratory relief adds nothing of substance to this request. See Verizon M d.,

535 U.S. at 645 (“W e have approved injunction suits against state regulatory

commissioners [under Young] . . . . Indeed, Ex parte Young itself was a suit

against state officials . . . to enjoin enforcement of a railroad commission’s order

requiring a reduction in rates.”). 29 That is, ORC’s complaint seeks only to prohibit

the State in the future from denying Choose Life Assistance Program funds to

organizations like ORC because they also advocate abortion. According to ORC,

Oklahoma imposes a so-called “unconstitutional condition” insofar as the State

allegedly provides no way for ORC to receive such funding to support its adoption

counseling services and still exercise its First Amendment right to speak out about

abortion, even using entirely private funds in entirely distinct programs. To

participate in the State’s C hoose Life Assistance Program, ORC contends it

effectively must give up its constitutionally protected right to advocate for

abortion even on its own proverbial time and using its own (non-governmental)

funds. 30

29
This stands in contrast to the situation we faced in ANR Pipeline. Had we
allowed the suit to go forward in ANR Pipeline, a federal court would have been in the
position of effectively rewriting a not insignificant portion of Kansas’s property tax code.
ANR Pipeline, 150 F.3d at 1194.

30
As the Supreme Court explained in Rust v. Sullivan, the problem of
unconstitutional conditions arise in cases where “the Government has placed a condition
(continued...)
-49-
 Of course, had ORC’s complaint gone further – seeking, for example, to

require the State to fund its abortion-related programs – we would have faced a

very different and considerably more difficult question under Coeur d’Alene and

Verizon M aryland. 31 But in this case, even if ORC were to prevail and obtain the

relief sought in its amended complaint, the State would remain free to promote

adoption and ensure that none of its monies go to abortion-related activities or any

other activities of which it disapproves. 32 Indeed, ORC agreed at oral argument

that the Supreme Court’s ruling in Rust v. Sullivan, 500 U.S. 173 (1991), allows

30
(...continued)
on the recipient of the subsidy rather than on the particular program or service, thus
effectively prohibiting the recipient from engaging in the [constitutionally] protected
conduct outside the scope of the [government-]funded program.” 500 U.S. 173, 197
(1991) (emphasis in original). Thus, in one early application of the doctrine, the Court
struck down a California law which required persons to swear an oath that they did not
advocate for the overthrow of the government of the United States or the State of
California in order to receive a tax exemption. Speiser v. Randall, 357 U.S. 513, 516
(1958). In doing so, the Court held that “[t]o deny an exemption to claimants who engage
in certain forms of speech is in effect to penalize them for such speech,” which
“necessarily will have the effect of coercing the claimants to refrain from the proscribed
speech.” Id. at 518, 519. The Court added that “when the constitutional right to speak is
sought to be deterred by a State’s general taxing program due process demands that the
speech be unencumbered until the State comes forward with sufficient proof to justify its
inhibition.” Id. at 528-29.

31
See, e.g., Barton v. Summers, 293 F.3d 944, 951 (6th Cir. 2002) (holding that an
attempt to force the State to make a particular allocation of Medicaid funds despite
congressional authorization allowing the State considerable discretion amounted to an
effort to obtain money damages impermissible under Coeur d’Alene).

32
Given the 2005 amendments, however, it now appears that Oklahoma law might
permit a license plate expressing support for – and even funding – abortion-related
activities. See supra at 7.

-50-
the State to make a choice to support adoption rather than abortion-related

programs. 33 ORC further acknowledged that it would be entirely permissible for

Oklahoma, consistent with the regime approved by the Supreme Court in Rust, to

require private organizations (like ORC) that support both adoption and abortion

to create a structurally separate affiliate that does not engage in abortion activities

to receive and account for governmental funds in order to ensure that public

monies are in no way intermingled w ith privately raised funds used for the group’s

separate abortion-related activities. Cf. Harris v. Owens, 264 F.3d 1282, 1293

(10th Cir. 2001) (holding that suit to obtain share of funds from tobacco settlement

would not impermissibly intrude on state’s interest in shaping law-enforcement

remedies where “[t]he state and the tobacco companies have already determined

how much money will be paid to the state; Harris merely seeks his portion (if any)

of these funds”). 34

33
See Rust, 500 U.S. at 198-99 (upholding government’s right to issue regulations
which required recipients of grants to engage in abortion-related activity separately from
activity receiving federal funding); see also Regan v. Taxation With Representation of
Wash., 461 U.S. 540, 545 (1983) (holding that Congress could exercise its spending
power to prohibit tax-exempt organizations from lobbying because organizations were
free to create separate affiliates which could receive private funds to support lobbying
efforts); accord United States v. Am. Library Ass’n, Inc., 539 U.S. 194 (2003) (declining
to decide unconstitutional conditions argument but reiterating Rust’s teaching that
government may insist that public funds be spent for purposes for which they were
authorized).

34
In Rust, the governmental regulations at issue did “not force the . . .
grantee to give up abortion-related speech; they merely require[d] that grantee to
keep such activities separate and distinct from its [government-funded family
planning activities]” such that “the . . . grantee [could] continue to perform
(continued...)
-51-
 Given all this, we are unable to conclude, as defendants would have us, that

the relief ORC seeks represents an impermissible form of relief under our received

Eleventh Amendment jurisprudence. Of course, at this stage we are confronted

only with a motion to dismiss and thus have taken plaintiff’s pleadings as true for

purposes of our analysis, drawing all inferences in ORC’s favor. W e offer no

comment on whether the O RC will ultimately be able to prove that Oklahoma’s

statutory scheme is constitutionally infirm. See Verizon M d., 535 U.S. at 646

(“[T]he inquiry into w hether suit lies under Ex parte Young does not include an

analysis of the merits of the claim.”). And, as with any other legal defense or

immunity, should the facts developed in discovery take the case in a direction

different from that suggested by the complaint, the trial court remains free to

revisit the applicability of the Eleventh A mendment, whether at summary

judgment or thereafter. That is, defendants remain free, as discovery progresses,

to try to establish facts suggesting that granting ORC the relief it requests would

operate to reduce the amount of funds flow ing to the state Treasury or otherwise

constitute something functionally equivalent to a retrospective judgment.

Likewise, we offer no comment on whether any other forms of relief ORC may

ultimately seek to add to this suit might or might not be problematic under the

(...continued)
abortions, provide abortion-related services, and engage in abortion advocacy; [the
grantee w as] simply required to conduct those activities through programs that are
separate and independent from the project that receives [government] funds.” 500
U.S. at 196.

-52-
Eleventh Amendment. For our current purposes, we need only conclude, as we do,

that litigation may proceed on the basis of plaintiffs’ amended complaint. 35

IV

For the reasons explored above, we hold that Oklahoma’s specialty license

plate charges are “taxes under State law” for the purposes of the TIA and thus

affirm the district court’s dismissal of claims one through four. W e also hold that

the prospective relief sought in this case falls within the scope of Ex parte Young

and is not barred by the Eleventh Amendment; we therefore reverse the district

court’s dismissal of claims five and six and remand those claims for further

proceedings consistent w ith this opinion. So ordered.

35
On November 12, 2004, the district court entered a Temporary Restraining
Order prohibiting the State from disbursing any monies from the Choose Life
Assistance Fund until July 1, 2005. On July 6, 2005, the parties entered into an
Agreed O rder pursuant to w hich the State promised to retain O RC’s pro rata share
of the funds available for distribution from the Choose Life Assistance Fund until
the case has been decided on the merits. W e need not decide – and express no
views on – whether any disbursement of these funds would be the functional
equivalent to an impermissible retroactive money judgment because no party to this
appeal challenged the Agreed Order. All that is now before us is a motion to
dismiss the complaint based on the allegations contained therein.

-53-