Thursday, March 19, 2015
The Brennan Center just released What Went Wrong with the FISA Court?, a history and analysis of the FISA court, its problems, and some suggested solutions, penned by Elizabeth Goitein and Faiza Patel.
The report walks through the history of FISA to show just how the law, technology, and the FISA court itself changed to create the conditions for the bulk, or programmatic, surveillance programs that we have today. The report argues that current programmatic surveillance programs raise significant Article III and Fourth Amendment problems. In order to solve these, the report suggests the following:
- End programmatic surveillance by prohibiting bulk surveillance under Section 215 and replacing Section 702 with a regime that would require an individualized court order for surveillance.
- Enact additional reforms and processes, including adding an adversarial process (an advocate against the government before the FISA court) and increasing transparency.
- Enact additional Fourth Amendment reforms, including restoring the requirement that the surveillance target is a foreign power or its agent, narrowing the definition of "foreign intelligence information," and restoring the test that requires that obtaining foreign intelligence information is the "primary purpose" of the surveillance.
- Reform programmatic surveillance, if it must continue.
Wednesday, March 18, 2015
The Fifth Circuit denied the plaintiffs' claims for attorneys fees in the 2012 case out of San Antonio over Texas redistricting. The ruling marks a bitter end for the plaintiffs in this long-running and complicated dispute that put the plaintiffs between two district courts, two different sections of the Voting Rights Act, the Texas legislature, and the Supreme Court--and stuck them with a $360,000 bill for . . . a victory. The ruling rewards Texas's foot-dragging through the preclearance process as two cases simultaneously worked their ways through the courts.
Recall that the plaintiffs sued Texas in the Western District of Texas over the legislature's redistricting plan. The plaintiffs argued that the plan violated Section 2 of the Voting Rights Act and the Equal Protection Clause, and that it hadn't been precleared under Section 5. (The preclearance case was pending before a three-judge court in D.C.) The San Antonio court enjoined the legislature's redistricting plan because it hadn't been precleared and drew its own district maps.
The Supreme Court then stepped in and rejected the San Antonio court's maps, but gave the court another shot at drawing them. The San Antonio court redrew the maps according to the Supreme Court's new standard. Following the Supreme Court, the San Antonio court issued its new maps as "a result of preliminary determinations regarding the merits of the Section 2 and constitutional claims presented in this case, and application of the 'not insubstantial' standard for the Section 5 claims." (That "not insubstantial" standard said that the San Antonio court could only consider the Section 5 preclearance claim insofar as the plaintiffs' challenges in the D.C. court were "not insubstantial." But the merits of the Section 5 claim were reserved to the D.C. court (and not the San Antonio court).)
The D.C. court denied preclearance to the Texas legislature's maps. Texas appealed, but used the San Antonio court's plan as an interim plan for its 2012 elections.
In 2013, the Supreme Court struck the preclearance coverage formula in Shelby County and later vacated the D.C. court's judgment denying preclearance to the legislature's plan. At the same time, Governor Perry signed a bill repealing the legislature's plan and adopting the court's plan. The San Antonio district court dismissed the case (or what remained of it, the plaintiffs' Section 2 and constitutional claims).
This seems like a win for the plaintiffs. So why no attorney fees?
The Fifth Circuit held that the plaintiffs weren't "prevailing parties" under the fee-shifting statute. The court said that the plaintiffs couldn't have won their Section 5 claim at the San Antonio court, because only the D.C. court can rule on the merits of a Section 5 claim. And the Fifth Circuit said that the plaintiffs didn't win their Section 2 and constitutional claims at the San Antonio court, because the San Antonio court never evaluated them.
The Fifth Circuit suggested that the plaintiffs might have been "prevailing parties" under a "catalyst theory," by merely demonstrating that their lawsuit caused Texas to alter its conduct. But the Fifth Circuit noted that the Supreme Court rejected this approach in Buckhannon.
The Fourth Circuit ruled in Greenville County Republican Party v. Greenville County Election Commission that various challenges to South Carolina's municipal election procedures lacked justiciability and dismissed the case.
South Carolina law required municipalities to adopt by ordinance either a partisan or nonpartisan way of nominating candidates for public office in municipal elections. If a municipality selected the partisan method, South Carolina law allowed a certified political party to select one of three procedures: a party primary, a party convention, or a petition. Nomination by party primary required an open primary. Nomination by convention required a 3/4 super-majority vote of the party membership.
The Greenville County Republican Party Executive Committee, an affiliate of the state Republican party but not itself a certified political party, challenged these procedures under the First, Fifth, and Fourteenth Amendments. The Committee sought declaratory and injunctive relief, and monetary damages for having to implement the procedures in prior elections.
As the case worked its way up and down, Greenville changed its ordinance to nominate candidates using a nonpartisan procedure.
The Fourth Circuit ruled that this mooted the Committee's claims for prospective relief. In particular, the court said that the County's decision was not capable of repetition but evading review, because the Committee didn't satisfy its burden of establishing "a reasonable expectation" that it wouldn't go back to the partisan method of nominating candidates for future elections.
As to the surviving claims, the court held that the Committee lacked standing. The court said that the Committee didn't suffer any harm from the super-majority requirement for convention-nominated candidates; instead, the state party suffered that harm--making the Committee's claim a nonjusticiable third-party claim. The court also held that the Committee couldn't satisfy the traceability prong of standing, because it was the state party, not Greenville, that elected to use the open primary system. (The state Republican Party was at one time party to the suit, but withdrew.)
The ruling ends this suit, and, in the wake of Greenville's decision to use a nonpartisan nominating process, almost certainly ends any challenges to Greenville's old partisan process.
March 18, 2015 in Association, Cases and Case Materials, Elections and Voting, Equal Protection, Fifth Amendment, First Amendment, Fourteenth Amendment, News, Opinion Analysis | Permalink | Comments (0) | TrackBack (0)
Friday, March 13, 2015
Earlier this week, Judge Hanen deferred a ruling on DOJ's motion to stay his nationwide injunction against DAPA until after March 19. He'll hold a hearing then on DOJ's Advisory (filed March 3) that the government granted about 100,000 deferred action applications (filed under the original 2012 DACA guidelines) for 3 years between November 24, 2014, and the court's order--and whether DOJ previously misled the court in representing that it wouldn't grant new deferrals under the new and expanded DACA guidelines during this period. It seems now even less likely (if that's possible) that Judge Hanen will grant DOJ's motion for a stay.
Then yesterday DOJ filed an Emergency Motion for Stay Pending Appeal, asking the Fifth Circuit to stay Judge Hanen's injunction nationwide, or, if not, at least limit it to Texas or the plaintiff states. DOJ argued that Judge Hanen's ruling is wrong, because it allows a single state to "override the United States' exercise of its enforcement discretion in the immigration laws." DOJ also addressed standing, and the underlying APA claim. DOJ wrote:
The court invented a novel theory of Article III standing that purports to confer standing on States without any actual injury. In the alternative, the court purported to find a cognizable injury to Texas based on indirect economic costs that are not the subject of these policies, that federal law does not obligate Texas to bear, and in disregard of the expected economic benefits of these same policies--a standing theory that would radically expand the ability of States to intrude into this uniquely federal domain.
On the merits, the district court erred in holding that DHS violated the notice and comment requirement of the APA.
DOJ also asked for expedited briefing (7 days for the plaintiffs to respond) and decision (14 days).
Fourteen states and the District of Columbia filed an amicus in support of the United States.
Then today the Fifth Circuit directed the plaintiffs that they have until March 23 to respond to DOJ's motion for a stay and for expedited appeal. (March 23 is obviously beyond the 7-day response time requested by DOJ. But the court's order specifically leaves on the table DOJ's "motion to expedite the appeal.")
The Fifth Circuit's order today doesn't say anything about the merits. But it may give a clue as to how the conservative court will view the case.
The upshot is that no stay is immediately on the horizon. The next move appears to be Judge Hanen's, at the hearing on March 19.
The ACLU filed suit this week on behalf of several media and human rights organizations challenging the NSA's "upstream surveillance" program. The plaintiffs argue that the program violates the First and Fourth Amendments, and that NSA has implemented upstream surveillance in violation of the FISA Amendments Act of 2008. (H/t reader Darren Elliot.)
Through upstream surveillance, a program disclosed by Edward Snowden after the Court handed down Clapper v. Amnesty International (more on that below), the NSA intercepts, collects, and searches all of Americans' international communications (e-mails, web-browsing, search engine queries, and the like). The NSA intercepts communications through devices directly on the internet backbone (with the help of providers like Verizon and AT&T), and it searches that material using keywords associated with NSA targets--that is, anyone outside the United States believed likely to communicate "foreign intelligence information."
The Supreme Court dismissed the last major suit of this type. The Court said that the plaintiffs in Clapper v. Amnesty International lacked standing to challenge NSA surveillance under the FISA Amendments Act (50 USC Sec. 1881a), because they didn't allege that they'd actually be targets of surveillance (only that they'd likely be targets).
This suit addresses the standing problem by alleging that upstream surveillance has already targeted them--because upstream surveillance is up and running and collects, in a drag-net kind of way, the kinds of communications that they engage in. And by including Wikimedia (with all its international internet connections), the ACLU ensures that at least one plaintiff has certainly been a target of this program.
Thursday, March 12, 2015
After the Supreme Court in NFIB v. Sebelius reduced the cost to states of declining to expand Medicaid under the ACA, or Obamacare, many states predictably declined to expand. The situation seemed to leave the federal government with little leverage to encourage states to expand Medicaid. That may be changing, at least in Florida.
Recall that the Court ruled in NFIB v. Sebelius that states could decline to expand Medicaid under the ACA and lose only the additional Medicaid expansion funding (and not their entire Medicaid budget). As a result, the federal government had little power to encourage states to expand their Medicaid programs, and, indeed, many states declined to expand--and thus declined to offer Medicaid coverage to millions of low-income individuals. Florida was one of those states, and, as a result, about 764,000 Floridians fell into a coverage gap.
But it turns out that the federal government, through the Centers for Medicare and Medicaid Services, runs another program touching on health-coverage for uninsured low-income individuals, the Low Income Pool. LIP provides federal funding to states to compensate hospitals and other providers for treating uninsured patients. The program currently provides about $2 billion per year to Florida, although Florida requested an increase to $4.5 billion.
The LIP renewal gives CMS leverage with the state to re-encourage Medicaid expansion, consistent with NFIB v. Sebelius. That's because LIP provides federal funds for medical coverage for substantially the same population that would be covered by Medicaid expansion (uninsured low-income individuals). In short, the federal government could pay states through LIP, or through Medicaid expansion. But it doesn't make sense to double-pay for the same services through both programs. So CMS can decline to renew Florida's LIP payments--and thus strongly encourage the state to adopt Medicaid expansion.
The gambit may be working: the state senate is now looking at Medicaid expansion (albeit with some of the strings that other states have put on their programs, like work requirements and co-pays). The state house reportedly still opposes expansion, however, and Governor Scott is careful to separate the two issues, LIP and Medicaid expansion, so as not to tie them in discussions with CMS. (Governor Scott wrote that he won't "backfill" a loss of LIP money with state funds. "Florida taxpayers fund our federal government and deserve to get a return on their investment.")
Depending on how this all plays out in Florida, this could be a model for encouraging Medicaid expansion in other states with LIP programs coming due.
The D.C. Circuit ruled this week that airlines have standing to challenge a TSA fee charged to passengers, because the fee, built into the price of an airline ticket, increases the net price for tickets and thus reduces demand. But the court went on to rule against the airlines on the merits.
The airlines in Airlines for America v. TSA challenged a TSA rule implementing a statutory fee designed to cover the cost of screening passengers. Airlines collect the fee as part of the ticket price and pass the proceeds along to TSA. The airlines challenged the rule as it applies to passengers whose travel begins abroad but includes a connecting flight within the United States.
TSA argued that the airlines lacked standing. But the court disagreed. The court said that the airlines were harmed by the fee (even if minimally), because it jacked up the ticket price and thus reduced demand:
We recognized . . . the basic proposition that "increasing the price of an activity . . . will decrease the quantity of that activity demanded in the market." . . . TSA has given no reason to suspect that any . . . exception is applicable here. Thus, the security fees injure the airlines by increasing the net price for airline tickets and reducing demand for those tickets. . . .
While the impact on demand is likely to be modest, the direction of change in demand is clear (downward). . . . [T]he court's duty to refrain from merits rulings until assured of jurisdiction . . . does not mandate an econometric study of the exact quantity of change. And, as the injury is inferable from generally applicable economic principles rather than from any special circumstances, it is sufficiently "self-evident" that we require "no evidence outside the administrative record."
But the court went on to rule against the airlines on the merits. In short, the court said that the statute, which sets the security fee at "$5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States," allows TSA to collect the fee for travel that begins abroad and connects in the United States (for example, from Paris to New York with a connection to Chicago).
Monday, March 9, 2015
The Supreme Court ruled today in Perez v. Mortgage Bankers Association that the Department of Labor need not engage in notice-and-comment rule-making when it changes a Department interpretation of an existing rule. At the same time, the Court overturned the D.C. Circuit rule that forced agencies to do this whenever an agency wished to issue a new interpretation that deviated significantly from an old one.
The ruling thus re-shifts power back to executive agencies in determining the meaning of their own regulations. That's because Congress didn't require agencies to use notice-and-comment rule-making for interpretations, but the D.C. Circuit did, when a new interpretation deviated significantly from an old one--that is, when an agency changed its interpretation. By overturning that decision, and putting interpretive decisions back in the exclusive hands of the agencies (with loose, deferential judicial oversight), the Court re-set the balance that Congress struck. The ruling is thus a victory for agencies and their power to interpret their own regulations without notice-and-comment rule-making and with deferential judicial review. (More on that last part below.)
The case grows out of DOL's re-interpretation of its FLSA rule on minimum wage and overtime for mortgage-loan offices. The agency's rule exempts certain classes of employees, including individuals who are "employed in a bona fide executive, administrative, or professional capacity . . . or in the capacity of outside salesman . . . ." In 1999 and 2001, DOL issued interpretive letters opining that mortgage-loan officers did not qualify for this exemption. In 2006, however, DOL reversed course and opined that mortgage-loan officers did meet the exemption. But in 2010, DOL went back to its old position, withdrew the 2006 interpretation, and opined that mortgage-loan officers didn't meet the exemption.
The Administrative Procedure Act requires agencies to provide public notice and an opportunity to comment when they propose new rules and regulations under an authorizing statute. But the APA does not require this notice-and-comment rule-making when an agency simply issues an interpretation. Seeing the potential for abuse, the D.C. Circuit devised a court-created rule that said that agencies still had to use notice-and-comment rule-making, even for a mere interpretation. The D.C. Circuit rule is called the Paralyzed Veterans rule, after the case that established it.
So the question in Mortgage Bankers Association was whether DOL had to use notice-and-comment rule-making in issuing its 2010 interpretation.
The Supreme Court said no. The Court, in an opinion by Justice Sotomayor, ruled that the APA by its plain terms exempts interpretative decisions from the notice-and-comment requirement, and that the D.C. Circuit's Paralyzed Veterans rule violated those plain terms. Justice Sotomayor wrote that Congress, in enacting the APA, considered the costs and benefits of applying notice-and-comment rule-making requirements to agency interpretations, and that Congress decided that notice-and-comment procedures weren't necessary.
All nine justices agreed on the result, but Justices Scalia, Thomas, and Alito each wrote separately to take issue in different ways and to different degrees with judicial deference to agency interpretations. In other words, they're not sure that the courts should defer to agency interpretations (even if courts do validly defer to agency rules), or they reject deference altogether. Judicial deference to agency interpretations comes from Bowles v. Seminole Rock & Sand Co. and Auer v. Robbins. In Auer (relying on Seminole Rock) the Court held that agencies may authoritatively resolve ambiguities in their own regulations.
The rule that courts defer to an agency's interpretation of its authorizing statute is well settled in Chevron v. Natural Resources Defense Council. This is called Chevron deference. But Auer extended that deference to an agency's interpretation of its own rules. This Auer deference is what caught the eyes of Justices Scalia, Thomas, and Alito.
They all indicated that they'd reconsider Auer deference if given the chance. Justices Scalia and Thomas both outlined their (separate) separation-of-powers objections to Auer deference. In short, Justice Scalia expressed concern that an agency could both write its own rule and then interpret that rule without meaningful oversight; Justice Thomas explained why Auer deference took power away from the judiciary and gave it to the executive agencies.
Both Chief Justice Roberts and Justice Kennedy signed on in full to Justice Sotomayor's opinion (as did Justices Ginsburg, Breyer, and Kagan). None of these joined Justice Scalia, Justice Thomas, or Justice Alito and the concerns with Auer deference that they expressed.
Any nuclear agreement negotiated by President Obama could be short-lived, according to an open letter signed by forty-seven Senate Republicans today, and Iran should take note.
The letter, first reported by Josh Rogin at Bloomberg, tries to school Iran in the U.S. Constitution and separation of powers--and to undermine President Obama's efforts to come to nuclear deal with Iran.
The letter warns that any agreement "not approved by Congress is a mere executive agreement" that "[t]he next president could revoke . . . with the stroke of a pen and future Congresses could modify the terms of the agreement at any time."
The letter also reminds Iran that President Obama leaves office in January 2017, "while most of [the letter signers] will remain in office well beyond then--perhaps decades."
Sunday, March 8, 2015
On the 5oth anniversary of the Selma-Montgomery March, President Obama and other dignitaries gathered in Selma to commemorate the iconic protest which is widely believed to have galvanized support for the Voting Rights Act of 1965.
Given the Court's closely divided and controversial 2013 decision in Shelby County (Alabama) v. Holder finding parts of the Voting Rights Act unconstitutional, as well as subsequent efforts by states to enact voting restrictions, Obama not surprisingly included pertinent references in his speech:
And with effort, we can protect the foundation stone of our democracy for which so many marched across this bridge –- and that is the right to vote. Right now, in 2015, 50 years after Selma, there are laws across this country designed to make it harder for people to vote. As we speak, more of such laws are being proposed. Meanwhile, the Voting Rights Act, the culmination of so much blood, so much sweat and tears, the product of so much sacrifice in the face of wanton violence, the Voting Rights Act stands weakened, its future subject to political rancor.
How can that be? The Voting Rights Act was one of the crowning achievements of our democracy, the result of Republican and Democratic efforts. President Reagan signed its renewal when he was in office. President George W. Bush signed its renewal when he was in office. One hundred members of Congress have come here today to honor people who were willing to die for the right to protect it. If we want to honor this day, let that hundred go back to Washington and gather four hundred more, and together, pledge to make it their mission to restore that law this year. That’s how we honor those on this bridge.
Obama left unelaborated what Congress might do in light of the Court's decision in Shelby. A full text of Obama's speech is here, but the video is worth watching:
Wednesday, March 4, 2015
The Supreme Court heard oral arguments today in King v. Burwell, the case testing whether IRS tax subsidies to health-insurance purchasers on a federally-facilitated exchange violate the ACA. We posted our oral argument preview here.
There were no huge surprises, and questions from the bench mostly aligned with conventional beliefs about the Justices' politics (with Chief Justice Roberts, in his near silence, declining to tilt his hand at all).
But questions from Justice Kennedy--one to watch here (along with Chief Justice Roberts)--suggested that federalism principles and constitutional avoidance may drive the case. (That assumes that Justice Kennedy controls the center in the case.) This could be an elegant way for a conservative Justice to uphold the subsidies, because it's rooted in the challengers' argument itself (and not the government's case). In other words, a conservative Justice could accept the challengers' premise, but still uphold the subsidies.
Justice Kennedy at several points raised federalism concerns about the challengers' case: If the challengers are right that Congress designed the ACA so that all states would establish their own exchange (on threat of the death spiral that would result if they defaulted to a federally-facilitated exchange, without tax subsidies), then isn't that coercion in violation of federalism principles? And if that's so, shouldn't the Court reject the challengers' reading for constitutional avoidance reasons? Here he puts the question to Michael Carvin, arguing for the ACA challengers:
Let me say that from the standpoint of the dynamics of Federalism, it does seem to me that there is something very powerful to the point that if your argument is accepted, the States are being told either create your own Exchange, or we'll send your insurance market into a death spiral. We'll have people pay mandated taxes which will not get any credit on -- on the subsidies. The cost of insurance will be sky-high, but this is not coercion. It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, there's a serious constitutional problem if we adopt your argument.
Later, he made a similar point with General Verrilli: "Because it does seem to me that if Petitioners' argument is correct, this is just not a rational choice for the States to make and that they're being coerced. And that you then have to invoke the standard of constitutional avoidance."
But in terms of constitutional avoidance, Justice Kennedy qualified his earlier statement to Carvin: "It may well be that you're correct as to these words, and there's nothing we can do. I understand that." Justice Kennedy also later seemed concerned with the government's Chevron argument, pointing out that a statute that costs billions of dollars in tax subsidies has to be absolutely clear.
Carvin argued that the ACA didn't create coercion for the states to establish their own exchanges. But he may have painted himself into a corner with the argument, because his argument also assumes that Congress thought all 50 states would establish an exchange, and, as Justices Ginsburg, Sotomayor, and Kagan pointed out, the portion of the ACA establishing a federally-facilitated exchange would be superfluous if all 50 states set up their own exchanges. They also pointed out that he had a different position in the last ACA challenge. Chief Justice Roberts rescued him, though, reminding everyone that he lost.
Most of the rest of the argument involved predictable statutory construction arguments, with no clear winner or loser. Maybe the only surprise was Justice Scalia's cramped reading of the four words, seemingly at odds with his approach (stated at oral argument earlier just this Term) to consider the context and entire statutory scheme when interpreting any individual provision.
Justice Ginsburg noted that standing is an issue, and that the Court can address it itself. Some of the other Justices fished a little around the question with General Verrilli. But in the end, General Verrilli didn't press the point and instead assumed that "because Mr. Carvin has not said anything about the absence of a tax penalty," that at least two plaintiffs still have standing.
Tuesday, March 3, 2015
The Supreme Court ruled today in Direct Marketing Ass'n v. Brohl that out-of-state retailers can move forward with their challenge to Colorado's requirement that the retailers notify Colorado customers of their Colorado sales and use tax burden and report tax-related information to those customers and to the Colorado Department of Revenue.
The case tests a state's best efforts at collecting sales and use taxes for out-of-state and internet purchases by its residents, given the long-standing rule that a state cannot tax out-of-state and internet retailers directly.
The underlying issue goes back to 1967, when the Court ruled in National Bellas Hess, Inc. v. Department of Revenue of Illinois that states cannot require a business to collect use taxes (the equivalent of sales taxes for out-of-state purchases) if the business does not have a physical presence in the state. That rule was based on the Dormant Commerce Clause. The Court reaffirmed that rule in 1992 in Quill Corp. v. North Dakota.
But that rule has created a significant loss of revenue for states, now that so many (and dramatically increasing) sales go through the internet, to out-of-state online retailers. The rule means that states cannot collect use taxes from those retailers.
So some states, like Colorado, implemented information and reporting requirements. For example, Colorado's law requires out-of-state retailers to inform its in-state customers of their use tax burden and to report tax-related information to Colorado tax authorities.
Out-of-state retailers sued, arguing that Colorado's requirements violated the Dormant Commerce Clause. The district court ruled in their favor, but the Tenth Circuit reversed, holding that the suit was barred by the Tax Injunction Act. In a relatively short and simple opinion today, the unanimous Court reversed, holding that the Tax Injunction Act did not bar the suit (because the Act only bars suits against a tax "assessment, levy or collection," and not information and reporting requirements).
The Court's ruling opens the door to the out-of-state retailers' challenge to Colorado's information and reporting requirements. If the district court is right, even these modest efforts violate the Dormant Commerce Clause--and create an even bigger headache for states trying to collect use taxes on their citizens' out-of-state and internet purchases.
On the other hand, Justice Kennedy signaled today in concurrence that the Court may be willing to reassess its Bellas Hess and Quill Corp. rule (or at least that the Court should reassess the rule) in light of the technological changes we've seen in the last 25 years (and the proliferation of online retailers) and the fact that the Dormant Commerce Clause changed enough between the two cases to render the Quill ruling questionable. (Justice Kennedy reminds us that three Justices upheld Bellas Hess in Quill on stare decisis grounds alone, and that the majority recognized that Bellas Hess stood on weak ground.)
Bellas Hess and Quill Corp. go to state use taxes, not information and reporting requirements like Colorado's. Still, the retailers' challenge to Colorado's information and reporting requirements could put Quill on the chopping block. (At least the district court decision striking the requirements relied on Quill.)
If so, this case (in its next round) could give the Supreme Court a chance to reassess the Quill rule and give states more latitude in collecting use taxes from out-of-state and internet retailers.
March 3, 2015 in Cases and Case Materials, Commerce Clause, Dormant Commerce Clause, Federalism, Jurisdiction of Federal Courts, News, Opinion Analysis, Recent Cases | Permalink | Comments (0) | TrackBack (0)
The Court will hear oral arguments tomorrow in King v. Burwell, the case testing whether the Affordable Care Act authorizes the IRS to provide subsidies to purchasers of health insurance on a federally-facilitated exchange. Here's my oral argument preview ("Significance" section is down below), from the ABA Preview of U.S. Supreme Court Cases, with permission:
The Affordable Care Act (ACA), or “Obamacare,” is designed to increase the number of Americans covered by health insurance and to decrease its costs. In order to achieve these goals, the ACA requires most Americans to obtain “minimum essential” coverage or to pay a tax penalty to the IRS. (The ACA, of course, contains many other provisions to achieve its goals, most notably the expansion of the Medicaid program. But the minimum-coverage provision, sometimes called the “individual mandate,” is the one most relevant to this case.)
To facilitate the purchase of health insurance, the ACA establishes health care “exchanges,” where individuals can purchase competitively-priced coverage. The Act provides that “[e]ach State shall . . . establish an American Health Benefit Exchange.” 26 U.S.C. § 1311. But it also provides that if a state does not “elect” to create an exchange, the federal government “shall establish and operate such exchange within the State.” 26 U.S.C. § 1321(c)(1). When the plaintiffs filed this case, 16 states plus the District of Columbia elected to set up their own exchanges; the remaining 34 states relied on the federally-facilitated exchange. (The U.S. Department of Health and Human Services (HHS) establishes the federally-facilitated exchange. It’s at www.healthcare.gov.)
To keep health insurance affordable, the Act provides a federal tax credit to low- and moderate-income Americans to offset the cost of insurance policies. The Act provides the credit to individuals who enroll in a health plan “through an Exchange established by the State under Section 1311.” 26 U.S.C. § 36B.
Pursuant to this provision, the IRS promulgated regulations making the tax credit available to qualifying individuals who purchase health insurance on both state-run and federally-facilitated exchanges. The IRS rule says that credits shall be available to anyone “enrolled in one or more qualified health plans through an Exchange.” The rule adopts by cross-reference a definition of “Exchange” by the U.S. Department of Health and Human Services (HHS) that includes any exchange “regardless of whether the Exchange is established and operated by a State or by HHS.”
The plaintiffs, Virginia residents who do not want to purchase health insurance, challenged the IRS rule, in particular, the provision of tax credits to purchasers on a federally-facilitated exchange. Virginia declined to establish its own health insurance exchange, so the state uses the federally-facilitated exchange. Without a federal tax credit, the plaintiffs would be exempt from the ACA’s minimum coverage requirement under the ACA’s unaffordability exemption. (This provision exempts individuals from the minimum coverage requirement if the cost of health insurance exceeds eight percent of their projected household income.) But with the federal tax credit, and the resulting reduced cost of health insurance, the plaintiffs do not qualify for the unaffordability exemption, and they must either purchase health insurance or pay the tax penalty. (As this goes to press, media reports have raised serious questions whether some of the plaintiffs are actually affected this way, and therefore whether they have standing to bring this suit. So far, neither the parties nor the Supreme Court have formally addressed these questions.)
The district court rejected the plaitniffs’ claims and upheld the tax credit. The United States Court of Appeals for the Fourth Circuit affirmed. (On the same day that the Fourth Circuit issued its ruling, the United States Court of Appeals for the D.C. Circuit held the opposite—that the ACA did not authorize the IRS to provide tax credits to purchasers on a federally-facilitated exchange. The full D.C. Circuit later vacated that ruling and agreed to hear the case en banc. The court then held the case in abeyance pending the outcome of this case.) This appeal followed.
In ruling on an agency’s interpretation of a statute, the Court uses the two-step process set out in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). In step one, the Court determines whether statutory language is ambiguous—that is, if it is reasonably susceptible of different interpretations. In making this judgment, courts use all the traditional tools of statutory construction, including the text and context of the provision in question. If the language is clear, “that is the end of the matter, for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”
If the language is ambiguous, however, the court moves to step two. At step two, courts ask whether an “agency’s [action] is based on a permissible construction of the statute”—a highly deferential standard. Courts uphold an agency interpretation so long as it is not “arbitrary, capricious, or manifestly contrary to the statute.” This standard is called “Chevron deference.”
The parties focus principally on the first step. They both argue that the Act’s text, structure, and history give an unambiguous meaning either against tax credits (the plaintiffs) or for them (the government). The parties also argue briefly why the Court should not grant Chevron deference to the IRS (the plaintiffs) or why it should (the government).
The plaintiffs argue that the plain text of the ACA restricts tax subsidies to health insurance purchases through state-run (and not federally-facilitated) exchanges. The plaintiffs point to three provisions: Section 1311, which says that states “shall” establish exchanges; Section 18041(c), which provides that HHS “shall . . . establish and operate such Exchange within the State,” upon a state’s “failure to establish [an] Exchange”; and Section 36B(c)(2)(A) & (B), which authorizes tax subsidies for coverage that is “enrolled in through an Exchange established by the State under section 1311.” The plaintiffs say that these three provisions clearly distinguish between state-run and federally-facilitated exchanges, and just as clearly authorize tax credits only for purchasers through state-run, not federally-facilitated, exchanges.
The plaintiffs assert next that the government’s arguments are meritless and do not override the plain language of the text. The plaintiffs say that just because the ACA authorizes HHS to establish exchanges does not mean that those exchanges are “established by the State” (under Section 36B). They claim that the ACA’s instruction to HHS (under Section 18041(c)) to establish “such Exchange” if a state declines to create an exchange does not mean a state-run exchange (and thus turn a federally-facilitated exchange into a state-run exchange); instead, “such Exchange” only means “an exchange,” whichever entity operates it. The plaintiffs contend that the ACA does not authorize HHS to establish an exchange on behalf of a state (thus making a federally-facilitated exchange a state exchange); instead, it only authorizes HHS to establish a federally-facilitated exchange when a state refuses to establish a state exchange. They say that the ACA’s definition of “Exchange” as one established under Section 1331 does not help the government, but instead just creates confusion and thus clarifies that only exchanges “established by the State” trigger subsidies. And finally the plaintiffs contend that the government’s claim that exchanges are “established by the State” as a matter of law is simply belied by the plain text of the Act.
The plaintiffs argue that other provisions in the ACA support its interpretation. As an initial matter, the plaintiffs claim that Section 36B is the only provision in the ACA that defines the scope of the tax subsidy, and so Section 36B is the only provision that the Court need consult. But the plaintiffs say that other provisions, too, support their interpretation. In particular, the plaintiffs argue that other portions of the ACA expressly deem certain non-state entities (but not the federal government) to be “states,” that other portions treat state-run and federally-facilitated exchanges distinctly, and that other provisions show that Section 36B is the provision that sets the terms of the tax subsidy in all relevant respects. Taken together, the plaintiffs say that the ACA authorizes the tax subsidy only to purchasers on a state-run exchange.
The plaintiffs argue that their interpretation leads to only logical results. They say that conditioning tax subsidies on a state’s creation of an exchange is not inconsistent with Congress’s desire to extend subsidies nationwide. Indeed, they say, that might be the most effective way to achieve Congress’s goal. That’s because tax subsidies, so limited, provide a powerful incentive for states to create their own exchanges, and thus to extend subsidies nationwide. (The plaintiffs point to the ACA’s Medicaid expansion provision as an illustration of how the same ACA uses incentives to states to achieve policy objectives. The plaintiffs claim that the ACA uses tax subsidies for purchasers on a state-exchange to create a similar kind of incentive.) The plaintiffs argue that the ACA’s legislative history supports this interpretation, and they say that its interpretation harmonizes with other provisions in the ACA.
Finally, the plaintiffs argue that Chevron deference cannot save the IRS rule. They say that the text is unambiguous (as above). They also say that an act requiring tax credits must be unambiguous. And they claim that the IRS has no authority to interpret Section 36B, in any event, because Section 36B is codified in Title 42 of the U.S. Code and not the Internal Revenue Code. (For similar reasons, they claim that HHS has no authority to interpret tax laws.)
In response, the government argues first that the Act’s text shows that tax credits are available through both state-run and federally-facilitated exchanges. The government says that “an Exchange established by the State” in Section 36B is a term of art in the Act that includes both state-run and federally-facilitated exchanges. It says moreover that the phrase “such Exchange” in Section 18031(b)(1) means that a federally-facilitated exchange stands in for a state-run exchange, and that therefore tax credits are available under Section 36B to purchasers on both. The government contends that this reading is the only reading that would allow the federally-facilitated exchange to run just like a state-run exchange—and that even the plaintiffs acknowledge that the exchanges should function the same. Finally, the government says that other provisions of the Act—including the Act’s definition of “Exchange” as “an American Health Benefit Exchange established under section 18031”—support its interpretation.
The government argues that the Act’s structure and design confirm its interpretation. It says that nationwide tax credits are essential to the Act’s insurance-market reforms—and that the Act could not achieve its dual goals of increasing coverage and reducing costs without it. Indeed, given the Act’s other provisions, the government says that the plaintiffs’ position “would have disastrous consequences for the insurance markets in the affected States.” Moreover, the government contends that the availability of tax credits in every state is essential to the ACA’s model of cooperative federalism. The government says that the plaintiffs’ reading transforms the ACA’s promise of state flexibility regarding exchanges into a threat that states would suffer severe consequences (lack of affordable health insurance for low- and moderate-income residents), without clear warning from Congress.
The government argues that the history of the Act supports its interpretation, too. The government says that it was well understood when the ACA passed that some states would not establish exchanges for themselves. The government also says that the tax credits are not a condition on a federal spending program available to the states (and thus do not operate as an incentive for states to establish their own exchanges); instead, they are independent federal tax credits, available to federal taxpayers, by virtue of their purchase of health insurance on an exchange. And the government says that the legislative record confirms that Congress intended tax credits to apply in every state.
The government argues that the petitioners’ position would lead to contradictions and other absurd results, given the way other provisions in the Act work. Most notably, the government says, if the plaintiffs’ interpretation were correct, no individual would be eligible to purchase insurance on a federally-facilitated exchange, and no individual-market plans could be sold there. That’s because only a “qualified individual” can purchase individual-market policies on an exchange, and the Act defines “qualified individual” as one who “resides in the State that established the Exchange.” 42 U.S.C. § 18032(f)(1)(A)(ii). Under this definition, there are no qualified individuals in a state with a federally-facilitated exchange.
Finally, the government argues that even if the Act contained an ambiguity, the Court should grant Chevron deference to the IRS interpretation.
This case is easily one of the most important cases of the Term, and even of the last several Terms. That’s because a ruling for the plaintiffs would mean that more than eight million people (and perhaps many more) could lose their health insurance, because they would lose their tax credit to purchase insurance at an affordable rate on a federally-facilitated exchange. It would mean that health insurance rates could skyrocket in states with a federally-facilitated exchange as much as 47 percent, according to a recent Rand Corporation study. And it would undermine a critical component of the Affordable Care Act, and probably (as a practical matter) lead to its ruin.
On the other hand, a ruling for the government would only keep the ACA operating as it is, forcing an unspecified (but probably very small) number of individuals to continue to purchase unwanted health insurance with the help of a federal tax credit. To be affected by a ruling for the government, an individual in a state with a federally-facilitated exchange, who did not want health insurance, would have to have just the right income so that the federal tax credit would push them out of an unaffordability exemption to the minimum coverage requirement. Opponents of the ACA who engineered this suit reportedly had difficulty finding individuals who fell into this category to act as plaintiffs. This may be an indication of just how few people are likely to be affected by a ruling for the government. It may also be further evidence that the real purpose of the case is not to protect these plaintiffs, but rather to dismantle the ACA.
Recognizing the importance of the case, amici too numerous to list here have weighed in on both sides. (The medical and insurance industries, at least so far as they participated in this case, favor the government. The U.S. Chamber of Commerce is conspicuously absent from the case.) Print periodicals, blogs, and web-sites are filled with analyses, commentaries, and opinions on the case. Not surprisingly, opinions in these media tend to divide along party lines, revealing just how political this case is.
The Court has commonly accepted tools of statutory construction to help it sort this case out. And the parties have not seriously contested those tools. (Even strict textualists like Justices Scalia and Thomas have said that in a statutory case like this courts look to the language and the broader statutory context. The only real debate is over the significance of legislative history. But the justices probably don’t need legislative history to rule (one way or the other) in the case, anyway.) But just because there is agreement on the tools, that doesn’t mean that the case will be simple, or that the justices will all agree on the result. Indeed, as we have seen, the parties have interpreted the Act very differently, even using the same, or similar, tools of statutory construction. Justices on the Court are likely to divide sharply on the outcome, too, even if they apply the same tools.
Whatever the Court says, the Court’s ruling in the case certainly won’t end debates over the ACA. If the plaintiffs prevail, supporters of the ACA will move quickly to amend the Act to authorize tax credits for purchasers on federally-facilitated exchanges, or to urge all states to create their own exchanges, or both. But there is little evidence that these tactics will work: the Republican-controlled Congress is unlikely to amend the Act, at least without using the case as a bargaining chip to exact significant concessions, which themselves would likely destroy the ACA; and states that declined to create their own exchanges would have little increased incentive to create an exchange (because they would recognize that the ruling would effectively unravel the Act). If the government prevails, opponents of the ACA will continue to rail against it, and vote against it in Congress. But unless and until they garner sufficient votes to override a certain veto by this president, or unless and until an opponent of the ACA moves into the White House, with a win here, the ACA will (continue to) be the law.
One final point: As this goes to press, there are serious questions, raised by Mother Jones and The Wall Street Journal, whether the plaintiffs suffered the kinds of harms that they alleged, and therefore whether they even have standing to bring this case. While neither the parties nor the Court have formally addressed the plaintiffs’ standing during this appeal, the government or the Court could raise it at any time. If so, and if the Court ultimately rules that the plaintiffs lacked standing, the Court would not address the merits of the case, thus leaving the tax credits comfortably in place, at least until opponents of the ACA can bring another case. That could happen quickly, if the D.C. Circuit resurrects its case. Or it could happen never, if opponents have the same standing problems in the D.C. Circuit case and if they have the same difficulties finding new plaintiffs that they had in this case.
Monday, March 2, 2015
The Supreme Court heard oral arguments today in Arizona State Legislature v. Arizona Independent Redistricting Commission, the case testing whether Arizona can use an independent commission (established by voter initiative, not by the legislature) to redraw congressional districts in light of the Election Clause's language that says that "The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof . . . ."
At its core, the arguments turn on just how pliable the term "the Legislature" is: Does it mean only the state legislature (as the legislature would have it); or does it also mean the lawmaking power of the state (as the commission would have it)?
The Court and attorneys predictably turned to text and history. The precedent, such as it is, wasn't much help.
Paul Clement, for the legislature, argued that the commission completely cuts the legislature out, by "permanently wresting that authority." It'd be a harder case, he conceded, if there were some role for the legislature. That prompted questions by Justices Kennedy and Kagan about voter-referendum-approved efforts like voter ID, or judge-drawn districts in the context of litigation: Don't those cut the legislature out completely? Clement argued that those initiatives actually delegate authority to the state legislature, not away from it. As to judge-drawn districts (a question from Justice Kennedy), Clement said that the Constitution requires the plan to go to the legislature. They also turned to line-drawing: If "the Legislature" means only the legislature, how can the legislature allow for so many exceptions (that is, how can the legislature allow any role for any other body, like a gubernatorial veto)? And doesn't the legislature still have a role under the commission system? Can't it initiate a referendum? Clement said no to this last point (although he conceded that the legislature could initiate a voter initiate, like anyone else). Still, there was some concern about where and how to draw lines.
The government, as amicus, argued that the legislature lacked standing. But this didn't gain any traction with the Court, and basically fizzled out.
Justices Scalia and Alito hit Seth Waxman, for the commission, with a series of questions about what "the legislature" means in other parts of the Constitution. Justice Kennedy jumped in with the history of state legislative appointments to the Senate, and the overriding Seventeenth Amendment. (It took the Seventeenth Amendment to take state legislatures out of Senate appointments. Why take state legislatures out of congressional line-drawing (without an amendment) here?) Waxman responded that the Court's interpretations favored the commission; but that response didn't seem to satisfy. (Again, the precedent didn't seem to persuade anyone much either way.) When Waxman turned to dictionaries to help him out, Justice Scalia (of all the Justices) pounced: "You've plucked that out of a couple of dictionaries!" Maybe this wasn't so surprising, though: Justice Scalia seemed to believe that he could decide the case on the text alone, and the idea that no other constitutional reference to "the legislature" means anything other than the legislature. Chief Justice Roberts added force when he wondered why Waxman's interpretation didn't make "the Legislature" superfluous. Waxman fell back on an argument that the Framers understood that the same word could mean different things in different contexts, but this point fell flat.
Clement at one point said that the legislature's position wouldn't foreclose the use of an independent commission to draw state legislative boundaries, and that in this way the people (and their commission) could influence the direction of the state legislature and thus influence the state legislature's congressional district map. He also said that it'd be a harder case if the commission didn't completely divest the legislature of all power in the map-drawing process.
If the people of Arizona are looking for a way to influence congressional district maps after this case, these may be all that's left.
Senators Orrin Hatch, Lamar Alexander, and John Barrasso wrote in WaPo that Republicans now have a plan for health care, should the Supreme Court strike the IRS subsidies for health-insurance purchasers on a federally facilitated exchange in King v. Burwell. The plan apparently involves "financial assistance to help Americans keep the coverage they picked for a transitional period." It also involves giving states "the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices." But the senators are short on detail.
There's another problem. While Hatch, Alexander, and Barrasso claim that "Republicans have a plan to protect Americans harmed by" the loss of IRS subsidies (should Obamacare opponents win in King), the most they can say is that "there is a good deal of consensus on how to proceed" among congressional Republicans.
Tuesday, February 24, 2015
Prof. Alan Morrison (GWU) offers his take on Arizona State Legislature v. Arizona Independent Redistricting Commission in this ACS Issue Brief. The case, scheduled for argument on March 2, tests whether Arizona's independent redistricting commission violates the Elections Clause and 2 U.S.C. Sec. 2a(c), and whether the state legislature has standing to bring the challenge.
The state legislature claims that the Commission (created by ballot initiative) violates the Elections Clause because it takes out of the hands of "the Legislature" the "Times, Places and Manner of holding Elections for Senators and Representatives."
Morrison argues that Arizona's commission is the state's "second effort at electoral reform," after the Court struck its public financing system in Arizona Free Enterprise Club's Freedom Club PAC v. Bennett. He says that gerrymandering reformers "should be rooting hard that the Court rejects the position of the Arizona legislature."
We'll post our oral argument preview soon.
Monday, February 23, 2015
A New Jersey trial judge today ruled that Governor Chris Christie's cut to the state's public pension system violated the state and federal contracts clauses. Along the way, the judge also ruled that the state's contractual obligation to fund its public pension system did not violate the state constitutional Debt Limitations Clause and Appropriations Clause, and did not impermissibly infringe on the governor's line-item veto power. Oh, and she also ruled that the trial court had jurisdiction over the case, and that it didn't present a political question.
In a case that "implicate[s] the fragile balance at the heart of the legislative process . . . where political, constitutional, and judicial forces appear to collide," this ruling has a little something for everyone.
As a result of earlier litigation, the state has a statutory obligation to fund its public pension system. And the statute is written to create a contract right on the part of public employees--so that any decision not to fully fund the system immediately implicates the state and federal contract clauses. So when Governor Christie wielded his line-item veto pen to cut the state contribution out of the legislature's appropriation bill (because of unexpectedly low revenues), the plaintiffs were waiting in the wings with their contracts clause claims. And the judge agreed with them. That part of the ruling is unremarkable.
But the Governor's creative defenses--and the court's rejection of them--demand some attention. The governor argued that the statutory obligation to fund the public pension system violated the state constitutional Debt Limitations Clause (which limits state borrowing burdens) and the Appropriations Clause. Moreover, Governor Christie said that the statutory obligation intruded upon his executive power to veto legislation. The court reviewed the text, history, and cases on the relevant state constitutional provisions and concluded that they did not override the state's statutory obligation to fund its public pension system.
The ruling means that the state has to find $1.57 billion to fund the system. Governor Christie will likely appeal.
The Fifth Circuit last week granted a school district's petition for rehearing en banc in a case involving off-campus student speech. The grant means that the full Fifth Circuit will get a crack at the issue whether and how off-school student speech critical of a school employee, but not otherwise disrupting the school, is protected under the First Amendment.
The case, Bell v. Itawamba County School Board, arose when a high school student was suspended for recording and posting on his Facebook page a rap song criticizing, with vulgar and violent lyrics, two named male athletic coaches for sexually harassing female students at the school. The student, Taylor Bell, wrote the song, recorded it, and posted it off campus, at facilities unrelated to the school. While students heard the song, they shouldn't have heard it at school--no cell phones, no Facebook on campus--and it didn't cause any disruption or interference with school activities. So the majority on the three-judge panel reversed the district court and ruled for Bell:
[T]he Supreme Court's "student-speech" cases, including Tinker, do not address students' speech that occurs off campus and not at a school-approved event. The Court has not decided whether, or, if so, under what circumstances, a public school may regulate students' online, off-campus speech, and it is not necessary or appropriate for us to anticipate such a decision here. Even if Tinker were applicable to the instant case, the evidence does not support the conclusion, as required by Tinker, that Bell's Internet-posted song substantially disrupted the school's work and discipline or that school officials reasonably could have forecasted that it would do so.
Given that the Court hasn't ruled on the issue, this may be one to watch.
Thursday, February 19, 2015
Philadelphia DA Seth Williams filed suit in the Supreme Court of Pennsylvania to stop Governor Tom Wolf from implementing his death penalty moratorium and reprieve for a certain condemned prisoner. DA Williams argues that Wolf exceeded his state constitutional authority in issuing these, because the governor has no power to issue a moratorium, and because the reprieve is really only a moratorium, beyond the scope of gubernatorial power.
On January 13, 2015, former Governor Tom Corbett issues a warrant scheduling Terrance Williams's execution for March 4. (Defendant Williams was convicted of first-degree murder, robbery, and conspiracy and sentenced to death.) Then on January 20, 2015, new Governor Tom Wolf, who said during his campaign that he'd issue a moratorium on the death penalty, did so. The moratorium runs "until the [bipartisan Pennsylvania Task Force and Advisory Commission] has produced its recommendation and all concerns [with the death penalty] are addressed satisfactorily."
Pursuant to the moratorium, Wolf also issued a reprieve for Defendant Williams, again, "until I have received and reviewed the forthcoming report of the Pennsylvania Task Force and Advisory Committee on Capital Punishment, and any recommendations contained therein are satisfactorily addressed."
DA Williams then filed this emergency case in the state high court, arguing that Wolf's actions exceeded his authority and violated the Pennsylvania constitutional Take Care Clause.
Here's the state constitutional reprieve power, in Article IV, Sec. 9(a):
In all criminal cases except impeachment the Governor shall have the power to remit fines and forfeitures, to grant reprieves, commutation of sentences and pardons; but no pardon shall be granted, nor sentence commuted, except on the recommendation in writing of a majority of the Board of Pardons, and, in the case of a sentence of death or life imprisonment, on the unanimous recommendation in writing of the Board of Pardons, after full hearing in open session, upon due public notice.
Under this provision, Wolf's reprieve isn't subject to approval by the Board of Pardons. But DA Williams argues that it's not really a reprieve, because it's not temporary. (It ceases when the Commission issues its report and all concerns are addressed--maybe never.) Instead, DA Williams says it's a permanent moratorium, that the governor has no authority to issue a permanent moratorium, and that the actions violate the state constitutional Take Care Clause.
If DA Williams is successful, the suit could stop Wolf's moratorium, and even his reprieve, resetting Defendant Williams's execution for March 4. If he's not successful, however, this could mark the beginning of the end of the death penalty in Pennsylvania.
Tuesday, February 17, 2015
DHS Secretary Jeh Johnson announced that the government would comply with the temporary injunction issued late yesterday by Judge Andrew S. Hanen (S.D. Tex.) halting implementation of the Deferred Action for Parents of Americans and Lawful Permanent Residents, or DAPA, program. But the government will appeal.
Here's Judge Hanen's opinion.
Judge Hanen's ruling is based on the APA, and did not address the Take Care Clause argument. The first 60 pages is dedicated to standing. We previously posted on the case here.