Under a federation the subdivisions aren’t just “convenient units”, they should be able to behave in their own interest. And when the interests of different units conflict, they got to solve it another way.

Suing each other might look like a waste of money, but it’s less wasteful than the alternatives, and still respects the principles of a federation (as having the central government dictating it out of the blue deprives the states of agency).

For reference, a century ago my homeland (Paraná) was disputing area with another state (Santa Catarina), even if both are controlled by the same federation (Brazil). The legal dispute lasted so long that it enabled a civil war, since neither side was properly supporting the population dislodged by a railway company.