Arm of the State Law and Legal Definition

Arm of the State refers to an entity or an organization created by a state. It operates as an alter ego or instrumentality of the state. For example, state university or a state department of natural resources. Generally, courts in the U.S. find an entity to be an arm of the state if it operates without substantial autonomy from state regulation.

In Sturdevant v. Paulsen, 218 F.3d 1160 (10th Cir. Colo. 2000), it was held that the arm of the state status must be determined in each case by reference to the particular state laws characterizing the entity. To determine whether an entity is an arm of the state, courts engage in two general inquiries:

1.The court first examines the degree of autonomy given to the agency, as determined by the characterization of the agency by state law and the extent of guidance and control exercised by the state;

2.The court examines the extent of financing the agency receives independent of the state treasury and its ability to provide for its own financing.

Several other factors are relevant to the arm-of-the-state determination:

1.the characterization of the governmental unit under state law;

2.the guidance and control exercised by the state over the governmental unit;

3.the degree of state funding received; and

4.the governmental unit's ability to issue bonds and levy taxes on its own behalf.