Archive | Administrative Law

Ninth Circuit to Hear Challenge to Obamacare’s “Platonic Guardians” January 28

I mentioned in a previous post that Progressivism has a curious definition of “democracy” that largely takes the form of unaccountable administrative agencies wielding enormous power to regulate people’s behavior. Perhaps the most extreme example of administrative power—the Independent Payment Advisory Board, or IPAB—is the subject of the latest constitutional challenge to Obamacare to be heard by a federal court of appeals. The Ninth Circuit will hear the case in a special session in Las Vegas on January 28.

IPAB is an agency created by Obamacare to regulate Medicare reimbursement rates. This group of bureaucrats is required by the statute to promulgate “recommendations” as to how to reduce Medicare costs—except that those “recommendations” go into effect automatically, without Congressional or Presidential approval. On the contrary, the law specifically forbids Congress or the President from altering these “recommendations” (except in one limited sense: Congress can replace those “recommendations” with new ones, so long as they achieve the same reductions as the originals.) And Obamacare even attempts to make IPAB immune to repeal. It allows Congress to abolish the agency only by passing a joint resolution during a narrow one-month window in 2017—and that resolution must receive the most extreme supermajority ever required in American law. Courts are prohibited from reviewing IPAB’s actions, also. In short, IPAB is an autonomous lawmaking body that operates without Presidential, Congressional, or Judicial checks or balances.*

Given its extreme degree of independence from popular control, it’s not surprising that opponents of the law labeled IPAB a “death panel.” The law’s defenders called that an exaggeration because the law expressly forbids IPAB from “rationing care.” But the law also doesn’t define what “rationing care” means—and since IPAB’s actions are immune from judicial review, it’s hard to see how courts could stop it from doing so. [...]

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Should the FCC Actually Want Review of the Net Neutrality Opinion?

Let me go beyond yesterday’s post to ask a related question. The Commission may well file a petition for rehearing and/or certiorari in yesterday’s net neutrality decision.  But if I were the FCC’s general counsel, would I actually want review of that decision? I think the answer is probably no.

Here is how I would analyze it. The opinion interprets the Commission’s section 706 authority broadly.  The Court found (and Judge Silberman bemoaned in dissent) that section 706 gives the FCC authority to promote broadband deployment via regulation, and that the FCC can construe such authority to “encompass[] the power to regulate broadband providers’ economic relationships with edge providers if, in fact, the nature of those relationships influences the rate and extent to which broadband providers develop and expand their services for end users.” As Judge Silberman noted, that is very broad authority.  And, as Geoffrey Manne and Berin Szoka from Tech Freedom discussed yesterday in decrying the majority opinion, section 706 applies to “advanced telecommunications,” which covers a wide range of services. With a single opinion, the FCC’s regulatory authority to implement a wide range of regulations has been placed on strong footing. That is a big deal. The FCC has relied on 706 in other Internet-related contexts, such as its order restructuring the universal service fund to support broadband-capable networks, and it will assuredly rely on it more in the future. On the assumption that I as the FCC general counsel would prefer the Commission to have authority (whether or not it chose to exercise it), this interpretation would make me very happy. (I could imagine being a general counsel to an FCC chair who wanted the FCC to have less regulatory authority and therefore might not like this interpretation of section 706, [...]

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Winning and Losing in the Net Neutrality Decision

There is lots to chew on in the D.C. Circuit’s net neutrality opinion issued today. (Full disclosure: I worked on the order and legal defense when I was at the FCC, so apply whatever filters you deem appropriate.)  There are a ton of interesting administrative law issues, which I plan to write about later.

But right now I will take a longer view. I am reasonably confident that if I were a member of Verizon’s board of directors and someone could have accurately predicted the content of today’s opinion before Verizon filed its lawsuit, as a director I would have said, “Then let’s not file the suit and let’s hope no one else does, either.”

What? You say.  Didn’t Verizon win? Yes, but there are three caveats.  First, and least importantly, the nondiscrimination rule applies to wireline Internet broadband providers but never applied to mobile Internet providers, so vacating that rule doesn’t affect mobile providers (like Verizon Wireless). Second, and more importantly, as co-blogger Jonathan notes, the D.C. Circuit opinion suggests the permissibility of a different form of “no-blocking” rule (one that the FCC’s general counsel at oral argument endorsed and claimed was the no-blocking rule the FCC in fact promulgated, but the D.C. Circuit read the rule differently).  But third, and most importantly, the D.C. Circuit majority reads section 706 of the Telecommunications Act of 1996 as providing significant regulatory authority to the FCC.  This is the most significant aspect of the opinion, in my view.  And the authority seems pretty broad.  Here is what Judge Silbermann said in dissent about the interpretation of section 706’s authority:

[The FCC] claims it must regulate broadly, so as to “protect[] consumer choice, free expression, end-user control, and the ability to innovate without permission,” 25 F.C.C.R. at 17949 ¶ 78, which

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D.C. Circuit Rejects “Net Neutrality” Rule

Today, in Verizon v. FCC, the U.S. Court of Appeals for the D.C. Circuit vacated key portions of the Federal Communications Commission’s “Open Internet Order” — aka the net neutrality” rule.  The court held 2-1 that that FCC has the authority to regulate broadband providers, and that such regulation may govern broadband providers’ handling of internet traffic.  Despite this holding, the FCC did not prevail because the court also concluded (unanimously) that the FCC’s specific regulations here were unlawful because the FCC sought to regulate broadband internet providers as common carriers.  This victory for Verizon and the other petitioners may be short-lived, however, as the majority opinion suggests alternative steps the FCC could take to effectuate a “net neutrality” policy without exceeding its statutory constraints. [...]

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More on the Legality of the Latest ObamaCare Fix

Last Thursday, the President announced a change in Administration policy designed to ensure that those who like their health insurance plans will be able to keep them for at least one more year, despite the legal requirements of the PPACA and its implementing regulations.  On Friday, I explained the President lacks the authority to waive the Act’s requirements, or even to set aside duly promulgated regulations, and could not make noncompliant health insurance plans legal under the PPACA.  All the President can do is to declare that the federal government will not enforce the PPACA’s requirements against insurers for renewing noncompliant plans.  The President’s announcement does not bind state insurance commissioners, however, nor does it overcome the legal jeopardy health insurers could face should they agree to renew such plans and enforce any terms that have been declared illegal under the PPACA.

The University of Michigan’s Nicholas Bagley is certainly more sympathetic to the PPACA than am I, but he is no more convinced of the legality of the President’s purported “fix.”  In a post on The Incidental Economist, he explains why he doubts whether the President’s assertion of enforcement discretion “works.”

The administration’s claim rests on an expansive reading of Heckler v. Chaney, an important Supreme Court decision from 1985. In Heckler, the Court held that agencies have wide discretion to decide whether, when, and how to enforce the law. No agency, the Court explained, has enough resources to police every technical legal violation. Instead, agencies must set priorities based on a host of factors—the harm caused by the violation, the likelihood of prevailing, the need to conserve scarce resources, and the like. Courts shouldn’t second-guess how an agency weighs all those factors. Enforcement, in the legal jargon, is “committed to agency discretion by law.”

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EPA Fares Well in D.C. Circuit

As I noted here, some progressives argue that the U.S. Court of Appeals for the D.C. Circuit is engaged in a “judicial jihad against the regulatory state,” environmental regulations in particular.  It seems someone forgot to tell the judges on the D.C. Circuit, for as Greenwire reports, the Environmental Protection Agency fares rather well in a court that is allegedly stacked with anti-regulatory zealots, and a large share of the EPA’s losses come from environmentalist groups or other interests seeking more stringent regulation, not regulatory relief.  From the story:

Obama and Senate Democrats say the nominees to the U.S. Court of Appeals for the District of Columbia Circuit are needed to fill out its 11-member bench and restore balance to a court that has been dominated by Republican appointees.

But a close look at rulings over the last year in the environmental, energy and conservation realm shows that the administration — and in particular, U.S. EPA — has fared well at the D.C. Circuit. . . .

The D.C. Circuit has ruled on more than 20 significant challenges to EPA regulations since June 2012. Of those, EPA won at least a dozen, or 60 percent, a better performance than EPA had at the circuit during George W. Bush’s administration, when it frequently lost to environmentalists. On top of the dozen, the agency scored partial wins in other cases by prevailing on some issues while losing on others.

While the Obama EPA has fared rather well in the D.C. Circuit, the Bush EPA did not — even in front of the same judges. [...]

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Is the D.C. Circuit a “Broken Circuit”?

Earlier this summer, the Environmental Law Institute’s Environmental Forum featured a cover story on the U.S. Court of Appeals for the D.C. Circuit by Doug Kendall and Simon Lazarus of the Constitutional Accountability Center entitled “Broken Circuit.”  As the sub-head promised, this article made the case that “A new breed of activism on the Court of Appeals for the D.C. Circuit — for environmental cases second in importance only to the Supreme Court and the central venue for high-profile lawsuits — threatens decades of progress.”  The Forum also included my brief counterpoint essay, “The D.C. Circuit Is Hardly in Crisis.”  This short piece was intended as a response to the Kendall-Lazarus piece though, as is the Environmental Forum‘s usual practice, I had to write my piece without having seen the article to which it was responding.

The Kendall-Lazarus article makes several conventional points.  It noted that the D.C. Circuit is of particular importance in environmental law because it hears the lion’s share of challenges to federal regulatory programs.  This is both because of its location and because, under some statutes, the D.C. Circuit has special or even exclusive jurisdiction over petitions challenging agency rules.  One consequence is that the D.C. Circuit has been the locus of controversy.  Senators and activist groups tend to pay more attention to D.C. Circuit nominees than to those for other circuits.  Thus it is no surprise that the first appellate judicial nominee ever defeated by a filibuster (Miguel Estrada) was a D.C. Circuit nominee, as was one of President Obama’s nominees who Republican Senators successfully blocked.

The Kendall-Lazarus article repeats Washington Post columnist Steven Pearlstein’s charge that the D.C. Circuit is dominated by  “a new breed of activist judges [who] are waging a determined and largely successful war on federal regulatory agencies.”  This is [...]

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No Chevron Deference for Agency Interpretation of Court’s Jurisdiction

In Shweika v. Department of Homeland Security, the U.S. Court of Appeals for the Sixth Circuit confronted an interesting question: Should courts give Chevron deference to an agency’s interpretation of an ambiguous statutory provision that determines the scope of a federal court’s jurisdiction to review the agency’s action.  In this case, Mazen Shwieka sought to challenge the U.S. Citizenship and Immigration Services’ denial of his application for naturalization, but the district court concluded it lacked subject-matter jurisdiction because Shweika had failed to exhaust his administrative remedies. Although the relevant administrative exhaustion requirements are not clear in the relevant statute, USCIS had interpreted the statute to preclude judicial review.  The Sixth Circuit disagreed.

Here’s a portion of Judge Moore’s opinion in which she discusses the Chevron issue.

We are persuaded by the reasoning employed by our sister circuits in concluding that Chevron deference does not apply to an agency’s interpretation of a federal court’s jurisdiction. First, the conditions that license Chevron’s application are not present in this case. “A principal reason why courts pay agencies no deference on jurisdiction conferring statutes is that such statutes do not grant powers to agencies.” . . .  Section 1421(c) does not delegate authority to the Executive Branch; rather, it confers power directly on federal courts. . . . Second, a key rationale motivating Chevron deference is missing from this case. Courts defer to an administrative agency’s interpretation of a statute in part because the agency has expertise that the court does not. Chevron, 467 U.S. at 865. Yet federal courts are experts when it comes to determining the scope of federal-court subject-matter jurisdiction. . . . Third, countervailing jurisdictional norms counsel against deference. The Supreme Court has repeatedly affirmed “the strong presumption that Congress intends judicial review of administrative action.” . .

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Durbin Amendment Decision — Good Law, Bad Policy

Last week, a federal district court threw out a regulation implementing the so-called Durbin Amendment to the Dodd-Frank financial sector reform law.  This amendment imposes limits on the fees banks and other issuers may charge merchants for the use of debit cards.  The amendment is bad policy, for reasons Todd Zywicki explained here.  Likely because it recognized the economic irrationality of the requirement, the Federal Reserve  adopted a fairly loose regulation implementing the amendment.  The only problem is that, in doing so, the Federal Reserve violated the relevant statutory provisions.  For this reason, Judge Leon threw out the rule.  The result will be tighter price controls on debit card interchange fees.  This may be bad policy — I believe it is — but it is what the law requires.

UPDATE: More from Richard Epstein here. [...]

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NY appellate court rules 5-0 against Bloomberg soda ban

The First Department of the Appellate Division of the New York Supreme Court has ruled 5-0 against NYC Mayor Michael Bloomberg’s soda ban, in the case of  In re New York Statewide Coalition of Hispanic Chambers of Commerce, et al. v. The New York City Department of Health and Mental Hygiene, et al. (The Hispanic Chambers opinion begins on page 22, following two other opinions released the same day.)

In New York State, the trial courts of general jurisdiction are the Supreme Court. The intermediate courts of appeal are the Appellate Division, which are divided into four geographic Departments, similar to the U.S. Circuit Courts of Appeal. The highest court is the Court of Appeals. Thus, Mayor Bloomberg has the option of trying to bring the case to the Court of Appeals.

The Appellate Division’s decision is quite straightforward: “[T]he Board [of Health] did not bring any scientific or health expertise to bear in creating the Portion Cap Rule. Indeed, the rule was drafted, written and proposed by the Office of the Mayor and submitted to the Board, which enacted it without substantive changes.” If the Board’s ban on the sale of sodas larger than 16 ounces were actually a health rule (similar, for example, to a ban on the sale of infected meat), there would not be so many exemptions for certain types of vendors.

The Appellate Division applied the four-part separation of powers test from Boreali v Axelrod, 71 NY2d 1 (1989). The Appellate Division summarized the four Boreali factors:

First, Boreali found the PHC [Public Health Council] had engaged in the balancing of competing concerns of public health and economic costs, “acting solely on [its] own ideas of sound public policy”. Second, the PHC did not engage in the “interstitial” rule making typical of administrative

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FDA Must Bar Imports of Sodium Thiopental

Today the U.S. Court of Appeals for the D.C. Circuit affirmed a lower court decision requiring the Food and Drug Administration to block the importation of sodium thiopental for use in lethal injection because it has not been approved by the FDA. Here is how Senior Judge Ginsburg summarized the court’s holding in the conclusion to his opinion for the court:

The FDCA imposes mandatory duties upon the agency charged with its enforcement. The FDA acted in derogation of those duties by permitting the importation of thiopental, a concededly misbranded and unapproved new drug, and by declaring that it would not in the future sample and examine foreign shipments of the drug despite knowing they may have been prepared in an unregistered establishment.

Although the D.C. Circuit vacated the portion of the lower court’s order that required states to turn over existing supplies of the drug, this decision will make it significantly more difficult to obtain this drug for use in lethal injection. It is also likely to create new opportnities to challenge scheduled executions because each time states revise their lethal injection protocols — such as by changing the drugs used — this creates new opportunities for legal challenges. Then again, perhaps the states will seek certiorari and this case will become another Heckler v. Chaney. [...]

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McConnell on the Obama Administration’s Decision to Delay the Employer Mandate

In tomorrow’s WSJ, Stanford’s Michael McConnell has an op-ed discussing the constitutional implications of the Obama Administration’s decision to delay enforcement of the PPACA’s employer mandate.

Article II, Section 3, of the Constitution states that the president “shall take Care that the Laws be faithfully executed.” This is a duty, not a discretionary power. While the president does have substantial discretion about how to enforce a law, he has no discretion about whether to do so.

This matter—the limits of executive power—has deep historical roots. During the period of royal absolutism, English monarchs asserted a right to dispense with parliamentary statutes they disliked. King James II’s use of the prerogative was a key grievance that lead to the Glorious Revolution of 1688. The very first provision of the English Bill of Rights of 1689—the most important precursor to the U.S. Constitution—declared that “the pretended power of suspending of laws, or the execution of laws, by regal authority, without consent of parliament, is illegal.” . . .

The Justice Department’s Office of Legal Counsel, which advises the president on legal and constitutional issues, has repeatedly opined that the president may decline to enforce laws he believes are unconstitutional. But these opinions have always insisted that the president has no authority, as one such memo put it in 1990, to “refuse to enforce a statute he opposes for policy reasons.”

As McConnell’s article makes clear, there is a major difference between discretionary enforcement decisions and a wholesale refusal to enforce a given legal provision.  It would be one thing if, say, the Administration announced it was going to focus its resources on pursuing particular types of employers for evading the mandate, or if it issued a guidance identifying the sorts of conduct that would be indicative of a willful (as opposed [...]

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A Rare Non-Delegation Decision

On Tuesday, the U.S. Court of Appeals for the D.C. Circuit held in Association of American Railroads v. U.S. Department of Transportation that Section 207 of the Passenger Rail Investment and Improvement Act of 2008 constitutes an unconstitutional delegation of legislative authority to a private entity.

Here is how Judge Janice Rogers Brown summarizes the opinion:

Imagine a scenario in which Congress has given to General Motors the power to coauthor, alongside the Department of Transportation, regulations that will govern all automobile manufacturers. And, if the two should happen to disagree on what form those regulations will take, then neither will have the ultimate say. Instead, an unspecified arbitrator will make the call. Constitutional? The Department of Transportation seems to think so.

Next consider a parallel statutory scheme—the one at issue in this case. This time, instead of General Motors, it is Amtrak (officially, the “National Railroad Passenger Corporation”) wielding joint regulatory power with a government agency. This new stipulation further complicates the issue. Unlike General Motors, Amtrak is a curious entity that occupies the twilight between the public and private sectors. And the regulations it codevelops govern not the automotive industry, but the priority freight railroads must give Amtrak’s trains over their own. Whether the Constitution permits Congress to delegate such joint regulatory authority to Amtrak is the question that confronts us now.

Section 207 of the Passenger Rail Investment and Improvement Act of 2008 empowers Amtrak and the Federal Railroad Administration (FRA) to jointly develop performance measures to enhance enforcement of the statutory priority Amtrak’s passenger rail service has over other trains. The Appellant in this case, the Association of American Railroads (AAR), is a trade association whose members include the largest freight railroads (known in the industry as “Class I” freight railroads), some smaller freight railroads, and—as

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Fourth Circuit Voids NLRB Posting Rule

Yesterday, the U.S. Court of Appeals for the Fourth Circuit joined the U.S. Court of Appeals for the D.C. Circuit in invalidating the National Labor Relations Board “poster rule.” This rule required employers to post a notice of employee rights under the National Labor Relations Act on their properties and websites. In Chamber of Commerce v. NLRB, the Fourth Circuit held that the NLRB exceeded its authority in enacting the rule. As Judge Allyson Duncan explained for the court:

the rulemaking function provided for in the NLRA, by its express terms, only empowers the Board to carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request. Indeed, there is no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition. We further note that Congress, despite having enacted and amended the NLRA at the same time it was enabling sister agencies to promulgate notice requirements, never granted the Board the statutory authority to do so. We therefore hold that the Board exceeded its authority in promulgating the challenged rule

I blogged about the D.C. Circuit’s decision here.

For those who care about such things, Judge Duncan was nominated by President Bush and her opinion was joined in full by Judges Henry Floyd and Stephanie Thacker, who were both nominated by President Obama. [...]

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Supreme Court Holds Chevron Deference Applies to Scope of Agency Jurisdiction

Today, in Arlington v. FCC, the Supreme Court held 6-3 that courts should confer Chevron deference to agency interpretations of ambiguous statutory provisions concerning the scope of agency jurisdiction.  Justice Scalia wrote for the majority.  Justice Breyer filed an opinion concurring in part and concurring in the judgment.  The Chief Justice dissented, joined by Justices Kennedy and Alito.

I participated in an amicus brief in this case, largely based on an article I co-authored with Nathan Sales. Alas, we were on the losing side.  My prior posts on this case are here and here, and earlier posts on the issue are here and here.

I hope to have more to say about the decision later today. [...]

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