Friday, July 24, 2015
The D.C. Circuit on Friday ruled that a case challenging the constitutionality of the Consumer Financial Protection Bureau can move forward. At the same time, the court dismissed claims against Dodd-Frank's Financial Stability Oversight Council and the government's orderly liquidation authority.
The mixed ruling sends the plaintiffs' case against the CFPB and the recess appointment of Director Richard Cordray back to the district court for a ruling on the merits. We'll undoubtedly see this case back at the D.C. Circuit.
We last posted on a challenge to the CFPB here. (The D.C. Circuit dismissed that case for lack of standing.)
The State National Bank of Big Spring and a number of states brought the case, arguing four points. First, the Bank argued that the CFPB is unconstitutional, because, as an independent agency, it has to be headed by multiple members, not a single director (as it is). Moreover, the bank says that Congress's delegation to the CFPB violates the non-delegation doctrine.
Second, the Bank argues that President Obama appointed Director Cordray as a recess appointment during a three-day intra-session Senate recess, in violation of Noel Canning. (Cordray was subsequently confirmed by the Senate, but the Bank says his actions in the meantime are invalid.)
Third, the Bank claims that the Financial Stability Oversight Council, which monitors the stability of the U.S. financial system and responds to emerging threats and has statutory authority to designate certain "too big to fail" financial companies for additional regulation, violates the non-delegation doctrine and related separation-of-powers principles.
Finally, the states claim that Dodd-Frank's liquidation authority, which permits the government to liquidate failing financial companies that pose a risk to financial stability, violates the non-delegation doctrine and the Bankruptcy Clause's guarantee of uniform bankruptcy laws.
The court held that the bank, as an entity actually regulated by the CFPB, had standing. The court also said that the bank's claims were ripe, under Abbott Labs and Free Enterprise Fund (the PCAOB case).
But the court ruled that the Bank lacked standing to challenge the Council. In particular, it rejected the Bank's novel claim that the Bank was harmed because the Council designated one of the Bank's competitors as "too big to fail," thus giving the competitor a "reputational subsidy."
The court also held that the states lacked standing to challenge the government's liquidation authority. The states said that they invested pension funds in financial companies, that states are therefore creditors in possible future liquidations, that such liquidations could deprive the states of uniform treatment, and that as a result the states' current investments are worth less. The court said this was too speculative.
July 24, 2015 in Cases and Case Materials, Congressional Authority, Courts and Judging, Jurisdiction of Federal Courts, News, Nondelegation Doctrine, Ripeness, Separation of Powers, Standing | Permalink | Comments (0)
Thursday, June 25, 2015
The Supreme Court ruled today that the Affordable Care Act means exactly what Congress thought it meant in the first place: everybody should get--and be able to get--health insurance.
The Court ruled in King v. Burwell that the ACA authorizes federal tax subsidies for qualified purchasers of health insurance on federally-subsidized exchanges. The ruling means that qualified purchasers will continue to receive federal tax subsidies for their health insurance, that they won't go without insurance (at least not for a lack of subsidies), and that Obamacare remains intact.
Opponents attacked the subsidies, arguing that the ACA authorized subsidies only for purchasers on state exchanges, not federally-facilitated exchanges, and that the IRS had to stop extending subsidies to purchasers on federally-facilitated exchanges. Their argument turned on a single phrase in the Act, that subsidies extend to "an Exchange established by the State," despite the overwhelming evidence that the Act, as a whole, was designed to provide universal coverage. Our oral argument preview is here.
The Court today rejected the opponents' arguments. Chief Justice Roberts wrote the majority opinion, joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan. He wrote that the phrase "an Exchange established by the State" was ambiguous, given the way the rest of the Act hung together, and that the Court therefore should give the phrase a reading that harmonizes with the rest of the Act, including the Act's clear purpose to provide universal coverage. That reading, he wrote, meant that tax subsidies extend to purchasers on both state-created and federally-facilitated exchanges.
Chief Justice Roberts's opinion is notable for its recognition of the several key components of Obamacare (guaranteed issue, community rating, individual mandate, and tax subsidies) and how they are designed to operate together to ensure universal (or close to universal) coverage. The majority opinion also discussed in some detail how these components evolved and ended up in the ACA and the health-care and health-insurance problems they were designed to solve (including the death spiral).
But Chief Justice Roberts also took the opportunity make a dig on process--how the legislative road to the ACA was hurried and lacked transparency.
Justice Scalia wrote the dissent, joined by Justices Thomas and Alito. The dissent was predictably colorful, but comes down to this:
The Court holds that when the Patient Protection and Affordable Care Act says "Exchange established by the State" it means "Exchange established by the State or the Federal Government." This is of course quite absurd, and the Court's 21 pages of explanation make it no less so.
Friday, June 12, 2015
The D.C. Circuit today vacated the conspiracy conviction by military commission of Ali Hamza Ahmad Suliman al Bahlul, an alien enemy combatant who one time bragged about his role in the 9/11 attacks. The court said that the conviction for inchoate conspiracy--a charge that's not an offense under the international law of war--violated the Article III power of the judiciary "by authorizing Executive Branch tribunals to try the purely domestic crime . . . ."
The ruling is a victory of Bahlul and a blow to the government in conducting military commissions. In short, the case says that the government's charge in a military commission must be recognized as violation of the international law of war, and that Congress lacks authority to define an otherwise domestic crime as an international law of war in order to vest a military commission with authority to convict for its violation.
But while the ruling is significant, it's almost certainly not the last word on this case that's already gone up and down the judicial hierarchy. In particular: It's gone en banc at the D.C. Circuit before, and seems likely to go en banc again, if not farther, to the Supreme Court.
The court ruled first that Bahlul's structural challenge (that his conviction violated Article III) was not waivable, and that the court could therefore hear it--and to hear it de novo--even though he didn't raise it below.
The court went on to say that while the government could conduct law-of-war military commissions under Ex Parte Quirin, Quirin and its progeny limit the charges to "offenses against the law of war." But the court held that inchoate conspiracy isn't one of those offenses, that even the government agreed that it isn't, and that Congress didn't have power to define it as such: "Congress cannot, pursuant to the Define and Punish Clause, declare an offense to be an international war crime when the international law of war concededly does not." The court held that because conspiracy is only a domestic offense, and not an international law offense, the Bahlul's conviction by military commission (an Article I tribunal, not an Article III court) impermissibly intruded into the Article III role of the courts.
The court rejected the government's arguments that historical practice and the Necessary and Proper Clause (augmenting the Define and Punish Clause) did the trick.
Judge Tatel, concurring, explained why he joined the en banc court when it previously said that the Ex Post Facto Clause did not prevent Congress from granting military commissions jurisdiction over conspiracy, but now joined Judge Rogers in saying that separation-of-powers did:
The answer is the standard of review. The en banc Court came down the way it did, and I voted the way I did, because al Bahlul had forfeited his [previous] ex post facto challenge by failing to raise it before the Commission, so our review was for plain error. Applying that highly deferential standard, the Court concluded that it was "not 'obvious that conspiracy was "not . . . triable by law-of-war commissions" at the time al Bahlul committed his crimes.
But the court reviewed Bahlul's structural challenge de novo. And "[i]n my view, whether Article III prohibits military commissions from trying conspiracy turns on what Ex Parte Quirin says and what Hamdan does not"--that "the law-of-war exception is exclusively international," and does not include domestic crimes.
Judge Henderson wrote a lengthy dissent, arguing that the majority's approach to Congress's power to define the international law of war would restrict Congress to only what the international community has said, and, worse, by the judiciary's reckoning:
My colleagues contend--as a matter of constitutional law, not simply comity--that the Congress cannot authorize military-commission trials unless the international community agrees, jot and tittle, that the offense in question violates the law of war. And the contend of international law is to be determine by--who else?--the Judiciary, with little or no deference to the political branches.
June 12, 2015 in Cases and Case Materials, Congressional Authority, Courts and Judging, Jurisdiction of Federal Courts, News, Opinion Analysis, Separation of Powers, War Powers | Permalink | Comments (0)
Monday, June 8, 2015
The Supreme Court ruled today in Zivotofsky v. Kerry that the President has exclusive power of recognition of foreign sovereigns, and that a congressional attempt to force the President to recognize sovereignty over Jerusalem (by Israel) impermissibly intrudes on the President's power.
The ruling is a decisive win for the presidency over Congress in the area of recognition of foreign sovereignty. It also puts an end to this highly politicized case involving U.S. recognition of sovereignty over Jerusalem.
Recall that Congress enacted legislation requiring the State Department to put "Israel" as the country-of-birth on a passport of any U.S. citizen born in Jerusalem, upon the request of the passport applicant. President George W. Bush signed the legislation, but with a signing statement saying that this was unconstitutional. The State Department has long had regs that say that only "Jerusalem" (and not "Israel") go on the passport of a U.S. citizen born in Jerusalem, so as not to tilt the balance toward one side on the sensitive question of who has sovereignty over Jerusalem.
Justice Kennedy wrote the Court's opinion, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan. Justice Kennedy said that the text and history of the Reception Clause (giving the President power to "receive Ambassadors and other public Ministers") gives the President alone authority to recognize foreign sovereigns. He wrote that the text and purpose of Section 214(d) of the Foreign Relations Authorization Act--which required the State Department to list "Israel" as the country-of-birth for a U.S. citizen born in Jerusalem, upon the passport applicant's request--intruded on that authority.
Justice Breyer filed a concurring opinion; Justice filed an opinion concurring in part and dissenting in part; Chief Justice Roberts filed a dissent (joined by Justice Alito); and Justice Scalia wrote a dissent (joined by Chief Justice Roberts and Justice Alito).
We'll have more analysis and review later.
Friday, May 29, 2015
The Fifth Circuit this week denied the government's motion for a stay of Judge Hanen's nationwide injunction against the government's deferred action program for parents of Americans and lawful permanent residents, or DAPA. The denial is not a final ruling on the merits (the court wrote that "we do not decide whether the Secretary has the authority to implement DAPA" at this "early stage of the case"); it says only that Texas's challenge to the program is sufficiently likely to succeed to withstand the government's motion for a stay. Still, the ruling presages the likely result on the merits and makes the case look even more likely to end up at the Supreme Court.
The court addressed two issues: Texas's standing to challenge DAPA, and the state's claim that DHS violated the Administrative Procedures Act in failing to use notice-and-comment rulemaking before implementing DAPA.
The court held that Texas had standing, because it'll cost the state some $130 under state law to subsidize each driver license for each DAPA beneficiary. The government argued that Texas could avoid the economic injury by changing its license-fee structure, and that in any event the many economic benefits of the DAPA program would offset the costs for the state.
The court rejected the former argument, saying that the "forced choice" itself is an injury:
The flaw in the government's reasoning is that Texas's forced choice between incurring costs and changing its fee structure is itself an injury: A plaintiff suffers an injury even if it can avoid that injury by incurring other costs. And being pressured to change state law constitutes an injury.
The court rejected the latter argument, saying that the economic offsets are of a different type--and that the injury therefore still stands, notwithstanding any economic benefits that the program may bring to the state.
Because the court said that Texas had standing based on its economic harm, it did not rule on Texas's claim that it had standing based on the district court's "abdication theory" (that Texas had standing because the federal government "abdicated" its "responsibility" to enforce the law in an area where it has exclusive authority).
The court said that Texas easily falls within the zone of interests of the INA, because "Congress permits states to deny many benefits to illegal aliens," and "the states seek only to be heard in the formulation of immigration policy before [the government] imposes substantial costs on them." The court also said that the INA doesn't bar judicial review.
The court held that DAPA amounts to "nonenforcement" of the INA, because it is the "affirmative act of conferring 'lawful presence' [quoting Johnson's memo] on a class of unlawfully present aliens." "[T]hat new designation triggers eligibility for federal and state benefits that would not otherwise be available."
On the merits, the court held that DAPA is not a mere policy statement (as the government argued), but rather is a "substantive" rule that requires notice and comment under the APA. According to the court, that's because DAPA doesn't really offer enforcement discretion, and it's more than internal procedural guidance (it's substantive, according to the court).
As to the nationwide injunction, the court only said that anything short of a nationwide ban would result in a "patchwork system" that would detract from the uniformity that Congress sought in the INA.
Judge Higginson dissented. He argued that "Supreme Court and Fifth Circuit caselaw forecloses plaintiffs' arguments challenging in court this internal executive enforcement guideline," and that "DHS is adhering to the law, not derogating from it." He argued that DAPA amounts to discretionary enforcement guidelines that aren't subject to notice-and-comment rulemaking under the APA.
Sunday, May 17, 2015
Judge Reggie B. Walton (D.D.C.) ruled in American Freedom Law Center v. Obama that the plaintiffs lacked standing to challenge the federal government's "transitional policy" and "hardship exemption," which permit individuals temporarily to maintain health insurance coverage through plans that are not compliant with the general requirements of the Affordable Care Act.
The ruling deals a blow to opponents of the government's exemption--but a fully predictable one.
The plaintiffs' theory of standing turned on market forces driving up an AFLC staff member's premiums. It goes like this: When the federal government temporarily exempted certain individuals from enrolling in non-compliant plans (in reaction to the political blow-back after many folks received notices that their insurance would be cancelled and changed to comply with the ACA), this depleted the pool of individuals enrolling in ACA-compliant plans; and that drove up the costs of those plans. Plaintiff Muise was enrolled in such a plan, and, indeed, saw his premiums rise.
In short, Muise argued that his premiums rose in his compliant plan because the government's exemption meant that fewer people enrolled in compliant plans.
Judge Walton disagreed. He noted that insurance premiums can fluctuate for any number of reasons, not just the government's exemption, and that the plaintiff's theory suffered from other defects in the causal chain. Quoting from the government's motion to dismiss:
[the] [p]laintiffs have not established any of the links in the causal chain . . . that would be necessary to their apparent theory of standing to challenge this particular exemption. [The] [p]laintiffs have not alleged, for example, that there are individuals in Michigan with cancelled policies; that any such individuals consider the other policies available to them to be unaffordable; that any such individuals have availed themselves of [the defendants'] "hardship" exemption for consumers with cancelled policies; that, but for this exemption, any such individual would have purchased "minimum essential coverage" . . .; that in purchasing such coverage, that individual would have entered the same risk pool as these [p]laintiffs; and that such individual's addition to the risk pool would have lowered [the] [p]laintiffs' premiums.
The ruling is consistent with similar rulings in other district courts.
May 17, 2015 in Cases and Case Materials, Courts and Judging, Executive Authority, Jurisdiction of Federal Courts, News, Opinion Analysis, Separation of Powers, Standing | Permalink | Comments (0) | TrackBack (0)
Wednesday, May 6, 2015
The D.C. Circuit last week dismissed a case challenging the Consumer Financial Protection Bureau under separation of powers. The ruling in Morgan Drexen, Inc. v. CFPB held that the plaintiffs lacked standing and should pursue their constitutional claims against the CFPB in a CFPB enforcement action pending in another federal district court.
The ruling ends this particular challenge to the CFPB (for now), but allows the plaintiff to pursue its challenge in the enforcement action.
Morgan Drexen filed the claim after the CFPB threatened enforcement action against the firm for violations of the Consumer Financial Protection Act and the Telemarketing Sales Rule in its bankruptcy and debt-relief services. Kimberly Pisinski, an attorney who contracts with Morgan Drexen for paralegal services, joined the suit on the theory that the CFPB's enforcement action against Morgan Drexen would affect her own law practice.
Morgan Drexen and Pisinski sought declaratory and injunctive relief, arguing that the CFPB is unconstitutional because its powers are overbroad, it's headed by a single director who is removable only for cause, it is funded outside the ordinary appropriations process, and judicial review of its actions is limited.
But soon after Morgan Drexen and Pisinski sued in the D.C. District, the CFPB filed an enforcement action against Morgan Drexen in the Central District of California. Pisinski, who apparently really, really wanted to be a part of the action, moved to intervene in that suit, too. (The court denied her motion. The court also recently granted the CFPB's motion for sanction and default judgment against Morgan Drexen, finding that "[d]efendants willfully and in bad faith engaged in a coordinated and extensive effort to deceive the Court and opposing counsel" and having "blatantly falsified evidence . . . concealing this fact from the Court, opposing counsel, and even their own counsel at every turn.")
The D.C. Circuit ruled that Morgan Drexen could lodge its constitutional claims against the CFPB in the enforcement case in the Central District of California instead of in its case in the D.C. District. The court said that Morgan Drexen wouldn't suffer any harm in harm in doing so, and that it'd support judicial economy.
The court also ruled that Pisinski lacked standing. That's because she didn't allege a CFPB enforcement action would harm her practice, or that she engaged in any illegal conduct as a Morgan Drexen contractor:
In sum, Pisinski has failed to proffer evidence in support of any of her theories of standing: that she was responsible for Morgan Drexen's allegedly illegal conduct, that her practice is or will be economically harmed by the Bureau's enforcement action against Morgan Drexen, or that implicit accusations by the Bureau that she exercised too little control over Morgan Drexen or engaged in illegal conduct herself could damage her professional standing. The record evidence does not show that she used Morgan Drexen's allegedly illegal services or that there is a substantial risk that the Bureau's enforcement action will cause harms to her practice or professional reputation that she has asserted.
Judge Kavanaugh dissented, arguing that Pisinsky had standing, and that the majority's approach is "more complicated than it needs to be."
Tuesday, April 7, 2015
The Fifth Circuit today affirmed the dismissal of a challenge to the Deferred Action for Childhood Arrivals, or "DACA," program by a group of ICE agents and deportation officers and the State of Mississippi. We previously posted on the suit here.
The plaintiffs lodged several claims against the DACA program, including a separation-of-powers and a violation of the Take Care Clause. They claimed that they had standing because Mississippi incurred expenses for state benefits for "illegal aliens" and because DACA forced the officers to violate the law, change the way they enforced the law, and face job sanctions for not deferring.
The court today rejected these standing claims and affirmed the dismissal of case. As to Mississippi, the court said that any injury was "purely speculative because there was no concrete evidence that Mississippi's costs had increased or will increase as a result of DACA." As to the officers, the court said that a violation of their oath to uphold the laws was not a sufficient injury for standing purposes; that their burden to comply with DACA also wasn't a sufficient injury and that in any event they failed to allege specific facts to support it; and that any threat of employment sanctions for not enforcing DACA was too speculative.
As to this last point, the court emphasized that DACA requires individual officers to "exercise their discretion in deciding to grant deferred action, and this judgment should be exercised on a case-by-case basis." This feature of DACA, of course, also goes to the merits by hard-wiring DACA with prosecutorial discretion and putting the program squarely within executive discretionary authority. As to standing, the court said that this feature makes it unlikely that an officer would be sanctioned for exercising discretion to deport.
Today's ruling says nothing about the merits of DACA. But it does illustrate why it's so hard to bring a challenge to DACA in court.
Wednesday, March 25, 2015
Judge Edgardo Ramos (SDNY) dismissed a private defamation case this week after the government moved to intervene and asserted the state secrets privilege. Judge Ramos ruled that moving forward with the case at all (even excluding privileged evidence) would "impose an unjustifiable risk of disclosing state secrets." The ruling thus puts an end to the case, unless and until appealed. It is not a ruling on the merits, however.
The case, Restis v. American Coalition Against Nuclear Iran, involves Greek shipping magnate Victor Restis's defamation claim against the group United Against Nuclear Iran for claiming, as part of its "name and shame" campaign, that Restis was involved in the illegal exportation of Iranian oil in violation of international sanctions. Restis sued UANI, and the government intervened and moved to dismiss on state secrets grounds, filing a classified declaration by the head of the government department that has control over the matter in support. (The government asserted, and the court apparently accepted, that the government couldn't even reveal "the department that has control over the matter" without risking the disclosure of secret information.)
Judge Ramos reviewed the declaration in camera and held two ex parte, in camera meetings with the government before determining that the state secrets privilege applied. "Having carefully reviewed the classified declarations and documents submitted by the Government ex parte, and being cognizant of a district court's obligation to grant 'utmost deference' to the executive's determination of the likely import of disclosure of the information on military or diplomatic security, the Court is satisfied that there is a reasonable danger that disclosure of the facts underlying the Government's assertion would in fact jeopardize national security."
Judge Ramos went on to say that "further litigation of this action would impose an unjustifiable risk of disclosing state secrets" and dismissed the case entirely. (Under the state secrets privilege, Judge Ramos might have allowed the case to move forward without the privileged evidence. But here, he said, any further litigation would risk disclosure.)
Notably absent from the ruling was any discussion of the state secrets privilege as a separation-of-powers principle. (Treating the privilege as a separation-of-powers principle has in the past led to a much more robust privilege, as in the Fourth Circuit's ruling in El-Masri.) Instead, Judge Ramos treated the privilege as it was designed and as the government apparently asserted it--as an evidentiary privilege. Even so, the government's assertion of the privilege resulted in the dismissal of the entire case.
Judge Ramos rejected the plaintiff's arguments that the government shouldn't be able to rely only on ex parte submissions for its assertion and that the case could be litigated in an in camera trial--because the evidence was apparently too secret even to tell the lawyers. Judge Ramos wrote, "The nature of the information here requires that counsel not be granted access."
Judge Ramos gave a hat tip--but only a hat tip--to the plaintiff's interest in access to justice:
The Court recognizes that dismissal is a "harsh sanction." It is particularly so in this case because Plaintiffs not only do not get their day in court, but cannot be told why.
Still, he said that "dismissal is nonetheless appropriate," because "there is no intermediate solution that would allow this litigation to proceed while also safeguarding the secrets at issue."
March 25, 2015 in Cases and Case Materials, Courts and Judging, Executive Privilege, Jurisdiction of Federal Courts, News, Opinion Analysis, Separation of Powers, State Secrets | 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.
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."
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.
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.
Wednesday, February 11, 2015
The White House today sent its long-awaited authorization for use of military force against ISIS (or ISIL) to Congress. Here's the accompanying letter from the President.
The draft AUMF authorizes the President to use "necessary and appropriate" military force against "ISIL or associated persons or forces." (The draft defines "associated persons or forces" as "individuals and organizations fighting for, on behalf of, or alongside ISIL or any closely-related successor entity in hostilities against the United States or its coalition partners.") The draft has a three-year duration, and specifically excludes the use of U.S. troops in "enduring offensive ground operations," but it contains no geographic restriction on the use of force.
The draft would also revoke the 2002 AUMF against Iraq. However, it does not revoke (or otherwise address) the sweeping 2001 AUMF, although President Obama calls for refinement, and ultimately revocation, in his accompanying letter.
The draft acknowledges that "the United States has taken military action against ISIL" already, and cites "its inherent right of individual and collective self-defense" as authority for that prior action. Last fall, the President cited his Article II powers and the 2001 AUMF as authority for military action against ISIS and the Khorasan Group.
Friday, January 9, 2015
The Nebraska Supreme Court today upheld the state law delegating authority to the governor to approve the Keystone pipeline and to use eminent domain to access land along the pipeline route. The ruling does not affect fight in Washington, however, where today the House passed a bill to approve the pipeline, and where President Obama promised to veto it.
The Nebraska case arose out of a Nebraska law that delegated to the governor the power to approve the pipeline. (The former governor did so.) Taxpayers sued, arguing that the law violated the state constitution.
Four (of seven) judges agreed. They said that the law violated a state constitutional provision that reserves to the Public Service Commission this kind of decision. That provision says,
There shall be a Public Service Commission . . . . The powers and duties of such commission shall include the regulation of rates, service and general control of common carriers as the Legislature may provide by law. But, in the absence of specific legislation, the commission shall exercise the powers and perform the duties enumerated in this provision.
The four judges wrote that "we have held that the PSC has 'independent legislative, judicial, and executive or administrative powers' over common carriers, which powers are plenary and self-executing." Moreover, "specific legislation" means "specific restrictions," not "general legislation to divest the PSC of its jurisdiction and transfer its powers to another governmental entity besides the legislature." Thus the legislative delegation over Keystone to the governor improperly intruded upon the power of the PSC under the state constitution.
But under another state constitutional provision, four judges aren't enough to rule a law unconstitutional. The state constitution requires a super-majority of five (of seven) judges to rule a law unconstitutional. So even though a majority held the delegation unconstitutional, it's not. That means the law stays in place, the delegation is good, and the governor's action approving Keystone is untouched.
Before ruling on the merits, the court also ruled on taxpayer standing. The same four judges that argued that the delegation was unconstitutional also held that taxpayers had standing. (The other three argued that there was no standing, and that the standing decision also required a super-majority.) The court invoked its "great public concern" exception to the general rule against taxpayer standing. Under that exception, the court can take up a taxpayer case when it involves an issue of "the Legislature's obedience to the fundamental distribution of power in this state": "when a taxpayer claims that the Legislature enacted a Law that undermines the fundamental limitations on government powers under the Nebraska Constitution, this court has full power and the responsibility to address the public rights raised by a challenge to that act." The "great public concern" exception gives the Nebraska courts more leeway in taking up taxpayer cases than the Supreme Court's standing rules under Article III.
Monday, December 22, 2014
President Obama on Friday signed the FY 2015 National Defense Authorization Act, and, as in prior years, issued a constitutional signing statement on provisions restricting the use of funds to move any detainee out of Guantanamo Bay.
President Obama's signing statement this year is a little different than in prior years: it includes an array of policy objections to Congress's forced maintenance of the detention facility. The constitutional objection is a little more dressed up than in prior years, but the core constitutional objection remains the same:
The executive branch must have the flexibility, with regard to those detainees who remain, to determine when and where to prosecute them, based on the facts and circumstances of each case and our national security interests, and when and where to transfer them consistent with our national security and our humane treatment policy. Under certain circumstances, the provisions concerning detainee transfers in both bills [the NDAA and the Consolidation and Further Continuing Appropriations Act, 2015] would violate constitutional separation of powers principles. In the event that the restrictions on the transfer of detainees operate in a manner that violates constitutional separation of powers principles, my Administration will implement them in a manner that avoids the constitutional conflict.
That means that the administration claims the right to ignore the restrictions when they violate separate of powers.
It's not clear that the changed language of the signing statement this year signals any greater likelihood that the administration will actually ignore the restrictions and move a detainee off the base in violation of the provisions. But President Obama's other actions (on immigration, on Cuba) might suggest that the administration is more willing to do this.
The Supreme Court hasn't ruled on the legal status of a signing statement like this. And even though a signing statement is involved in the Zivotofsky passport case this Term, the Court's not likely to say anything about it.
Tuesday, December 16, 2014
A federal district judge in Pennsylvania has taken it upon himself to rule President Obama's recently announced immigration action unconstitutional--in a case that apparently has nothing to do with the action. We've posted on President Obama's action, and challenges to it, here, here, and here.
The surprising and brazenly activist, stretch-of-a-ruling underscores just how political President Obama's action has become, driving a district judge to reach out in a wholly unrelated case to rule the action unconstitutional.
The ruling comes in a case involving an undocumented immigrant who pleaded guilty to re-entry into the United States by a removed alien in violation of 8 U.S.C. Sec. 1326. Judge Arthur J. Schwab (W.D. Pa.) then ordered the parties to brief whether President Obama's action has any impact on the defendant, and whether the action is constitutional. Despite the government's reply that the action wouldn't affect this defendant (because "the Executive Action is inapplicable to criminal prosecutions under 8 U.S.C. Sec. 1326(a), and . . . [it] solely relates to civil immigration enforcement status"), and the defendant's agreement with that position, Judge Schwab said that the action could protect the defendant from removal and went ahead to rule on its constitutionality.
Even if the action applied to the defendant, however, Judge Schwab didn't bother to explain why ti was relevant to this proceeding, or why he had to rule on its constitutionality, except to say this:
Specifically, this Court was concerned that the Executive Action might have an impact on this matter, including any subsequent removal or deportation, and thereby requiring the Court to ascertain whether the nature of the Executive Action is executive or legislative.
Judge Schwab went on to say why he thought the action was unconstitutional, relying not on the ordinary judicial tools for such an important task (like, say, the text of the law, serious consideration of Supreme Court precedent, prior executive practice, etc.), but instead on President Obama's public statements about the action. Judge Schwab wrote that the President can't act just because Congress won't (answering President Obama's public statements suggesting that he'd act unilaterally if Congress wouldn't) and that the President's action is policy-making, not prosecutorial discretion, because it treats a large class of people alike.
Oddly, after concluding that the action is unconstitutional, Judge Schwab goes on to consider whether it applies to this defendant. (His conclusion: maybe, maybe not. Judge Schwab says the action leaves the defendant in a "no-man's land.") Ordinarily, this question would come prior to the constitutional question--for constitutional avoidance reasons, but also because it is logically prior to the constitutional question. Still, Judge Schwab answered it second.
In a final surprising move, Judge Schwab says that President Obama's action violates the rights of the defendant, because it doesn't obviously grant deferred status to him, even as it grants deferred status to others.
Judge Schwab concluded by giving the defendant a chance to withdraw his guilty plea, go to sentencing and take one year supervised release in the United States, or go to sentencing and be turned over to ICE.
So the logic of the opinion appears to be this: The President's action is unconstitutional; but if it is constitutional, it doesn't obviously apply (or not apply) to the defendant; and therefore the defendant should have a chance to withdraw his guilty plea in order to (possibly) take advantage of the (unconstitutional) action. All this after both parties agreed that the President's action didn't really have anything to do with this case in the first place.
With all its twists and turns, it's really hard to make heads or tails of this opinion. But one thing is clear: This is not the stuff of a serious separation-of-powers ruling. If the case against President Obama's action is going anywhere, opponents are going to have to do better--much better--than this.
Friday, December 5, 2014
As expected, Texas Governor-Elect Greg Abbott led 17 other states and state officials in suing the federal government over President Obama's immigration policy.
The complaint argues that the President, through DACA and administration immigration policies, caused a humanitarian crisis by encouraging illegal immigration and then turning a blind eye to undocumented immigrants within the country. It contends that the President, having created this crisis, now makes it even worse by authorizing an even larger class of certain undocumented immigrants to stay. The plaintiffs claim that even President Obama previously said, repeatedly (with quotes), that taking the kind of action that he took would have exceeded his authority. This all appears to be just context, or even political blustering; the plaintiffs don't say why or how any of it bears on their legal claims.
The complaint discusses the OLC memo that provides legal justification for President Obama's policy, but doesn't seriously try to undermine it. The complaint says only that the OLC justifies President Obama's policy based in part "on much smaller and more targeted deferred action programs that previous Congresses approved," such as "deferred action for victims of violence and trafficking, family members of U.S. citizens killed in combat, and family members of individuals killed in the September 11 attacks."
That's true, as far as it goes. But it also woefully under-describes the OLC analysis. The complaint doesn't take issue with the other components of the OLC memo, like the statutory analysis, e.g. The plaintiffs appended the OLC memo to their complaint.
The plaintiffs argue that the President's policy violates the Take Care Clause and the APA. As to the Take Care Clause, the complaint says, "the President admitted that he 'took an action to change the law.' The Defendants could hardly contend otherwise because a deferred action program with an acceptance rate that rounds to 100% is a de facto entitlement--one that even the President and OLC previously admitted would require a change to the law." As to the APA, the complaint alleges that the President's policy made law without proper authority, and without following notice-and-comment rulemaking procedures.
Tuesday, November 25, 2014
Texas Governor-Elect Greg Abbott put the finest point yet on Republicans' legal case against President Obama over his announcement last week to defer immigration enforcement action against certain unauthorized aliens. Abbott said in a statement yesterday that President Obama's move violated the Take Care Clause, Congress's immigration authority under Article II, Section 8, and the Administrative Procedure Act.
These claims are head-and-shoulders above the kind of general blustering we've heard from others in the debate. But they're still far from specific. Indeed, they're answered by the OLC's own legal analysis: the OLC relies on congressionally-designed flexibility in the text of the INA, among other legal authorities, to conclude that President Obama's action is consistent with, and supported by, the INA. In other words, Congress wrote the INA (using its authority under Article II, Section 8) to give the President just this kind of flexibility in enforcement. If that's true--and we haven't heard many (if any) specifics challenging this interpretation from opponents of President Obama's actions--then it seems odd to argue that President Obama isn't properly executing the law, or that he isn't respecting a uniquely congressional authority, or that he's violating the APA. Indeed, it seems that's exactly what he's doing.
Moreover, Abbott's statement is silent on prior executive practice, an important tool in sorting out this kind of separation-of-powers problem.
Abbott swears that "[t]his is a legal issue, not a political issue." But before we can take that claim seriously, it'd help if Abbott, Oklahoma AG Scott Pruitt, Kansas AG Kris Kobach, and others threatening suit sharpen their case with a little statutory interpretation and history of executive practice (to say nothing of Supreme Court precedent). We'll keep you posted.