Many political theorists, particularly advocates of small government, adhere to the principle of subsidiarity (Wikipedia page) which, in the context of governance, says that in so far as a particular responsibility falls on the government, it should be undertaken by government at the lowest level possible. Thus, city and town governments are preferred over province and state governments, which in turn are preferred over national governments. Among the reasons offered are higher accountability to a smaller citizenry as well as better ability to tailor actions and policies to local needs. In the United States, the application of this principle specifically to the delegation of powers between the states and the federal (national) government is termed federalism (Wikipedia page).

Nations versus city and state governments

In the context of immigration policy, the principle of subsidiarity would suggest that immigration policy should be decided at the lowest level possible. For instance, cities and towns should be free to set their own immigration policies. This would, however, conflict with other nationally set rules that guarantee no undue restrictions on the movement of national citizens between the parts of the nation, so a caveat may be created that citizen movement cannot be restricted. This leaves open four possibilities. The possibilities are stated at the city level, though similar possibilities can be framed at the state or province level:

• Overriding subsidiarity: Cities are required to allow all citizens of the nations to enter the city, but can set their own policies regarding people who are not citizens of the nation. The city is not required to honor national visas either way (though many cities may default to doing so).
• Expansionist subsidiarity: Cities are required to allow all citizens of the nation, as well as all people on valid visas at the national level, to enter the city, but can set their own policies regarding people who are not on valid national visas, i.e., people who might otherwise be classed as illegal immigrants. In other words, they can issue their own visas over and above national visas if they so choose.
• Restrictionist subsidiarity: Cities are required to allow all citizens of the nation to enter the city, but can choose to restrict the entry of non-citizens, even those on valid national visas, based on local concerns. They cannot, however, issue additional visas, i.e., they do not have the legal authority to house “illegal immigrants” in the city.
• No subsidiarity: Cities do not have any authority in the matter. They are required to allow all citizens and all people on valid national visas to enter the city, and do not have the legal authority to permit anybody else into the city.

Enforcement variant
Another related area where subsidiarity comes up is the area of enforcement. Often, national governments do not enforce existing immigration restrictions perfectly. In this case, there is a question of what role city and state governments have in enforcing these laws. There are three positions here:

• Extreme subsidiarity position: The city or state decides the extent to which it will work to enforce national immigration laws, i.e., the extent to which the city’s or state’s resources will be devoted to identifying illegal immigrants and reporting them to national authorities.
• Restrictionist position: The city or state has an obligation to devote resources to enforcing national immigration laws.
• Expansionist position: The city or state has an obligation to stay out of the matter of national immigration laws.

Nations versus multi-national bodies

The nation versus city/state discussions can be transferred to another situation: where multiple nations get together and decide on reducing or eliminating border controls between the nations. An example of this is the Schengen agreement (Wikipedia page) that aimed to reduce border controls between European nations, and allowed citizens as well as valid visa holders for some European nations to travel freely to other European nations. The Schengen agreement, originally signed in 1985, was later incorporated into European Union law in 1997.

Related topical issues in United States immigration policy and enforcement

• US state immigration crackdowns, such as those in Arizona and Alabama, have kindled much debate that centers of questions of subsidiarites and the discretionary authority of US states to enforce, ignore, or oppose federal immigration law.
• US sanctuary city and state policies: Some cities and states in the United States have adopted policies that are mirror opposites to those of Arizona and Alabama: they direct local police and government officials to not attempt to enforce federal immigration law, i.e., to not conduct investigations into the immigration status of the people they deal with in their day-to-day duties.

Writings
Here are some writings on the matter:

• City-Based Visas by Brandon Fuller for the Urbanization Project blog.
• Utah Approves Guest Worker Program for Illegal Immigrants on the ABC News website (March 7, 2011).
• Let the Arizona Law Stand, Then Wither by Peter Spiro in the New York Times by Ilya Somin in the blog post Federalism, Immigration, and Interjurisdictional Competition on the Volokh Conspiracy blog.
• Justice Antonin Scalia’s dissent in US vs Arizona (argued April 25, 2012, decided June 25, 2012) — full PDF of court case (Scalia’s dissent is pages 30-51 of the document). Scalia is sympathetic to the idea that individual states should have more control over the entry and exit of foreigners, and justifies his views based on a reading of the Constitution and the history of the United States. His dissent was discussed and critiqued at many places such as by Ian Tuttle in National Review, by Richard Posner in the Arizona Daily Star, and again by Richard Posner in Slate.

P.S.: Thanks to Alex Nowrasteh for suggesting some of the links and references on this page.