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The gym leaders seem to be the highest authority in their city, if not entire region in the show.
It is interesting though that when Gary shows his badges, he only has Boulder, Cascade, and Rainbow as identifiable ones. Sabrina and Blaine obviously couldn't happen because of plot, and Ash just randomed into Koga's gym which is an unmarked ninja castle presumably somewhere near Fuchsia City, seems he could have fought Lt. Surge freely.
