Final answer:
Federalism entails that disputes between states, such as those over shared water resources, fall under the jurisdiction of federal courts, with the U.S. Supreme Court having original jurisdiction.
Step-by-step explanation:
When dealing with a scenario where a state sues another state over a shared source of water, the concept of federalism dictates that such disputes are under the jurisdiction of the federal courts. This is because one feature of federalism is that the national courts, particularly federal courts, are often the ones to resolve disputes between different levels and branches of government. The U.S. Constitution grants the Supreme Court original jurisdiction over cases in which a state is a party, as established in Article III. This means neither option a) nor b) is correct; instead, the case would go directly to the Supreme Court without being heard first in any state court.