Tag: Commerce Clause

What’s Next in the Obamacare Litigation?

My colleagues and I have covered the substance of the Eleventh Circuit ruling that two weeks ago struck down the individual mandate, but where do we go from here?  Why hasn’t the Supreme Court yet resolved the conflict between that ruling and the Sixth Circuit’s from earlier in the summer?  When will it do so?  A few points:

  1. The government is now likely to seek en banc review, meaning that they want the entire 10-judge court to review the 3-judge panel’s ruling.  It’s extremely unlikely that the Eleventh Circuit would grant such a motion because the panel is already 2-1 against and the members of the court not on the panel are a 4-3 Republican-appointed majority.  You need a majority (6 of 10) to get en banc review, which means the dissenting Judge Stanley Marcus from the panel, plus the three other Democratic appointees, plus two others.  Not gonna happen.  Thus, a government motion for en banc rehearing would be a purely political ploy to push the eventual Supreme Court decision past the election – no legal reason to do it. The release of the decision not to grant en banc review (which doesn’t require a written opinion) could be delayed, however, by the writing of a dissent from that denial.
  2. The earliest the Supreme Court could grant cert – on the existing petition out of the Sixth Circuit – is the moment after this blogpost goes live.  (Note that Cato adjunct scholar Tim Sandefur filed an amicus brief supporting that petition for the Pacific Legal Foundation, which brief he describes here.)  More realistically, it would be the week before the term opens for argument in October, right after the so-called long conference, when the justices review and rule on all the petitions that have come in over the summer. But they’ll likely wait to get the Eleventh Circuit case because they’d probably rather hear from the 26 states (and their counsel, former solicitor general Paul Clement) than any other plaintiffs. Here’s where it gets interesting: Assuming the government asks for en banc review, the plaintiffs could still file their own cert petition because they lost on severability and the Medicaid-coercion issue. Stay tuned.
  3. I still think this will get to the Court this term one way or another, with argument in the spring and a decision the last week of June.
  4. No stay of the Eleventh Circuit’s ruling is needed because the individual mandate doesn’t go into effect until 2014 and that’s the only provision that’s been struck down. So we don’t need to go into the type of analysis we did after Judge Vinson’s decision about what the federal government is authorized to do to keep implementing the legislation, in the 26 states or generally.

For more analysis, largely based on the above, see Jennifer Rubin’s Washington Post blog.

Supreme Court Should Review Obamacare Case Now

I’m glad Trevor Burrus took the laboring oar in pointing out highlights from an Eleventh Circuit opinion that, as he put it, “is not only exhaustive, it is convincing.”  I’ve been swamped with editing the Cato Supreme Court Review and preparing for our Constitution Day conference, so have had little time to put words on paper (or even on screen) after my initial statement.

I did put together one op-ed, however, that ran today in Politico.  Here’s an excerpt:

By [striking down the individual mandate], the court — including, for the first time, a judge appointed by a Democratic president — reaffirmed that the Constitution places principled limits on federal power. It rejected the government’s argument for a situational limit on Congress’s regulatory authority based on the idea that health care is “unique,” and somehow different both from other products that everyone consumes (like food, clothing and shelter) and other types of insurance against unpredictable events (like death, disability and natural disasters).

The government’s position failed to sway the court because it did not suggest a constitutional interpretation of the commerce power. Indeed, factors like the inevitability and unpredictability of treatment, the requirement that hospitals treat people with emergency medical conditions and the high cost of advanced care “speak more to the complexity of the problem being regulated than the regulated decision’s relation to interstate commerce. They are not limiting principles, but limiting circumstances.”

I conclude that now that we have two thorough circuit court opinions going in opposite directions, there’s no reason to wait any further:  The government should file for, and the Supreme Court should grant, a petition for certiorari (review).  Any delay by the government would be base political strategery, an attempt to push the eventual Court decision – whatever it is – past the November 2012 presidential election.

‘The Constitution Requires Judicial Engagement, Not Judicial Abdication,’ Writes the 11th Circuit, and Then Leads by Example

On Friday, when the 11th Circuit struck down the individual mandate portion of ObamaCare, a trip to the Supreme Court became all but assured. Previously, although Supreme Court review was highly probable even if a circuit split didn’t develop, there was still an outside chance that the Court would deny review if all circuit courts upheld the law. Now, the Court is essentially obliged to take the case. This is reason enough to be happy about the decision.

As I work my way through the opinion, I become even happier. The opinion is not only exhaustive, it is convincing. If Congress oversteps the outer limits of its power, the court explains, then “the Constitution requires judicial engagement, not judicial abdication.” Thus, we are given over 200 pages of “judicial engagement”: the law is thoroughly explained, the Supreme Court precedents are summarized, and every major counter-argument is addressed. Moreover, the opinion adds nuance to certain arguments that were either not discussed in the briefs or discussed in a subtly different way. I will highlight some of those nuances below.

The opinion describes “two broad limitations on congressional power under the Commerce Clause.” The first is an “accommod[ation] of the Constitution’s federalist structure” that “preserve[s] ‘a distinction between what is truly national and what is truly local.’” The second is that courts should “not interpret the Commerce Clause in a way that would grant to Congress a general police power, ‘which the Founders denied the National Government and reposed in the States.’”

Both of these limitations are indisputable aspects of the existing case law. They are also too often ignored. By enumerating these limitations, the 11th Circuit opinion makes them even more explicit, almost turning them into factors of a legal test. And this is the right way to conceive of them. Those of us who oppose the mandate have constantly reiterated that, if this is allowed, there is nothing left that Congress may not do. Those who support the mandate have either pushed back against this characterization and argued that “health care is special” (in other words, “just this once, we swear”), or they have accepted the new scope of congressional power with a shrug, arguing that existing Supreme Court cases validate the individual mandate, even if this gives Congress unlimited power.

Friday’s opinion unequivocally asserts that such a result is unacceptable. If the current tests of congressional power under the Commerce Clause—specifically the “substantial effects” test articulated in Wickard v. Filburn—are so broad that there is no limitation other than the whims of Congress, then it is time for the Supreme Court to explain whether this constitutionally perverse result is, in fact, where we now stand. Otherwise, the 11th Circuit is obliged to uphold the original principles of the Constitution—that Congress’s powers are “few and defined”—against an unprecedented law that would undermine this founding tenet.

Having established this framework, most of the rest of the opinion concerns itself with whether the individual mandate satisfies this constraint, looking “not only to the action itself but also its implications for our constitutional structure.” And the court does not forget that “while these structural limitations are often discussed in terms of federalism, their ultimate goal is the protection of individual liberty.”

Focusing on the overall constitutional structure, the court then downplays the usefulness of the “activity/inactivity” distinction that has been so much a part of both the nationwide discussion of ObamaCare and Cato’s briefs. “Simply put,” the court writes, “the individual mandate cannot be neatly classified under either the ‘economic activity’ or ‘noneconomic activity’ headings.” Instead, the court is more concerned with “(1) the unprecedented nature of the individual mandate; (2) whether Congress’s exercise of its commerce authority affords sufficient and meaningful limiting principles; and (3) the far reaching implications for our federalist structure.”

The court observes that “economic mandates such as the one contained in the Act are so unprecedented…that the government has been unable, either in its briefs or at oral argument, to point this Court to Supreme Court precedent that addresses their constitutionality.” This fact is not just historically interesting, it is crucial to understanding the limits Congress’s powers. The power to compel economic transactions could hardly be more attractive to a Congress that already engages in numerous attempts to control and manage the marketplace. But “[e]ven in the face of a Great Depression, a World War, a Cold War, recessions, oil shocks, inflation, and unemployment, Congress never sought to require the purchase of wheat or war bonds, force a higher savings rate or greater consumption of American goods, or require every American to purchase a more fuel efficient vehicle.”

Finally, in perhaps my favorite part of the opinion, the judges address the so-called “essential to a broader regulatory scheme” argument that has been pushed heavily by government. In his concurrence in Gonzalez v. Raich, Justice Scalia wrote that “Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce.” Thus, the government has argued that, even if the individual mandate regulates a nonecomomic inactivity that is wholly local in nature, Congress can assert power over those passive individuals via a broad regulation of interstate commerce.

If we keep in mind the second “first principle” that the court listed at the outset—that any ruling that imbues Congress with unlimited “police powers” is unacceptable under our Constitution—then this argument is essentially indistinguishable from the government’s other arguments. The court puts this very clearly:

We first note the truism that the mere placement of a particular regulation in a broader regulatory scheme does not, ipso facto, somehow render that regulation essential to that scheme. It would be nonsensical to suggest that, in announcing its “larger regulatory scheme” doctrine, the Supreme Court gave Congress carte blanche to enact unconstitutional regulations so long as such enactments were part of a broader, comprehensive regulatory scheme. We do not construe the Supreme Court’s “larger regulatory scheme” doctrine as a magic words test, where Congress’s statement that a regulation is “essential” thereby immunizes its enactment from constitutional inquiry. Such a reading would eviscerate the Constitution’s enumeration of powers and vest Congress with a general police power.

The court then makes a nuanced distinction, focusing its analysis on the word “essential” rather than the words “broader regulatory scheme.” The question is whether the control of the intrastate activity is “essential or appropriate to protect that commerce from burdens and obstructions,” and whether those intrastate activities “in a substantial way interfere with or obstruct the exercise of the granted power [i.e. the power to regulate commerce].” When analyzed in this way, the court rightly concludes that “an individual’s uninsured status in no way interferes with Congress’s ability regulate insurance companies.”

There are many other wonderful passages throughout this lengthy and thorough decision. The 100-page dissent, even if thoroughly wrong-headed, is also worthy of respect. If you’ve been following Cato’s involvement in ObamaCare, then I highly suggest reading full opinion, or at least the juicy parts.

An Unprecedented Expansion of Federal Power

That’s how I describe the individual mandate in my contribution to SCOTUSblog’s online symposium on Obamacare, which Trevor Burrus has already highlighted.  Here’s an excerpt:

All the Obamacare legal challenges boil down to Congress’s authority – or lack thereof – to require people to buy private insurance.  Although unfortunately not dispositive of modern judicial decisions, the text of the Constitution demands that the Supreme Court strike down the individual mandate as an unconstitutional exercise of Congress’s power to regulate interstate commerce.  Finding the mandate constitutional would be the first interpretation of the Commerce Clause to permit the regulation of inactivity – in effect requiring an individual to engage in an economic transaction.

Moreover, upholding Obamacare would grant the federal government wide latitude to mandate that Americans engage in activities of its choosing.  An expansive holding here would fundamentally alter the relationship between the government and the people.  If the challenges fail, there will be no principled limits on federal power.

I go on to describe the current state of play at the appellate and outline what we can expect going forward, as well as providing links to useful resources on this issue.  Read the whole thing.

Commerce Clause Abuse, Non-Obamacare Division

The federal government is currently engaged in a misguided attempt to use a noneconomic statute – the Endangered Species Act – to regulate under its Commerce Clause authority a noneconomic activity, the potential “take” of the noncommercial, wholly intrastate delta smelt.  Acting under this purported authority, the U.S. Fish and Wildlife Service issued an opinion in 2008 that requires a reduction of critical water deliveries in California for the alleged benefit of the threatened delta smelt species.  The delta smelt-based water cutbacks have resulted in substantial hardship to farmers and other water users in Southern California and the San Joaquin Valley.  

In 2009, the Pacific Legal Foundation filed a lawsuit contending that regulation of the delta smelt is not a valid exercise of the Commerce Clause.  The district court and the Ninth Circuit Court of Appeals disagreed.  Cato joined Chapman University’s Center for Constitutional Jurisprudence and former attorney general Edwin Meese in filing a brief that supports PLF’s request for Supreme Court review.  

We argue that the Court should take this case in order to delineate the constitutional distinction between federal and state power and protect the states’ exclusive police power to regulate and advance the health, safety, and welfare of the people.  Specifically, our brief argues: (1) that the federal government’s regulation of a wholly intrastate, noncommercial species exceeds Congress’s powers under the Commerce Clause; (2) the expansive application of the ESA to the delta smelt, because it is noncommercial species that doesn’t travel across state lines, intrudes on the core police powers reserved to the states; and (3) that the Supreme Court should repudiate the aggregation principle of Wickard v. Filburn (the 1942 wheat-farming case central to the Obamacare litigation).  Striking down the expanded interpretation of the ESA at issue here is not enough. 

If left untouched, the Ninth Circuit decision opens the door to unlimited and abusive assertions of power by an assortment of federal agencies.  The Court needs to reinforce and rebuild the limits of the Commerce Clause and to reign in a federal government that continues to believe that the Constitution sets no bounds on its power. 

The name of the case is Stewart & Jasper Orchards v. Salazar.  The Supreme Court will decide this fall whether to hear it.

The Sixth Circuit Got It Wrong

Today’s 2-1 Sixth Circuit Obamacare decision was an exercise in unwarranted judicial deference, not by the author of the majority opinion, Judge Boyce Martin, who regularly rubberstamps misuses of federal power, but by concurring Judge Jeffrey Sutton, who avoided the logical implications of this ruling and punted the main issue to the Supreme Court.  Under a document establishing a government of enumerated and therefore limited powers, the burden is on that government to prove that it has the power to do something, not on the plaintiffs to disprove that power.  Never has the Supreme Court ratified the federal power to force someone to buy a product in the marketplace under the guise of regulating commerce.  Indeed, never, not even during the height of the New Deal, had Congress asserted such a power—until the health insurance mandate. 

To allow such a power now is to read out of the Constitution any structural limitations on federal power, which, as Justice Kennedy reminded us for a unanimous Supreme Court two weeks ago in Bond v. United States, are the Constitution’s first and greatest protectors of liberty.  While a progressive like Judge Martin could be expected to accept any exercise of federal power, it is shocking that an avowed constitutionalist like Judge Sutton requires Congress to show only a rational basis behind what it does—a “reasonable fit” between the means it chooses and the ends of regulating interstate commerce—to survive constitutional scrutiny.  Under such logic, Congress can do anything it wants so far as it is essential to a larger regulatory scheme.  That cannot be the law.

As Chief Justice Marshall wrote nearly two centuries ago, any legislation Congress enacts under its power to make laws that are necessary and proper for executing an enumerated power must “consist with the letter and spirit of the [C]onstitution.”  A constitutional interpretation resulting in Congress being the judge of its own powers, that forces people to engage in commerce rather than regulating existing commerce, fails that test. 

Judge Sutton does well to describe the Supreme Court’s inflation of federal authority over the last 75 years and is to be commended for demanding that the Court “either should stop saying that a meaningful limit on Congress’s commerce power exists or prove that it is so.”  But he has it backwards in saying that it’s not the role of the lower courts to invalidate legislation that goes beyond even the modern warped doctrine; the decision on whether to expand existing Supreme Court precedent is precisely that ultimate court’s alone.

If the Court joins the Sixth Circuit and goes there, it would mean putting the final nail in federalism’s coffin.  But I doubt that proposition will find five votes—and before then we may even see decisions to the contrary from one or more circuit courts.

Shooting for State Sovereignty

On October 1, 2009, Montana passed the Montana Firearms Freedom Act, the purpose of which was to regulate guns manufactured and kept within Montana state lines under a less restrictive regulatory regime than federal law provides. That same day, to ensure that Montanans could enjoy the benefits of this less restrictive state regulation, the Montana Shooting Sports Association filed a declaratory judgment claim in federal court.

The lawsuit’s importance is not limited to Montana, as seven other states have passed laws similar to the MFFA and 20 states have introduced such legislation. The goal here is to reinforce state regulatory authority over commerce that is by definition intrastate, to take back some of the ground occupied by modern Commerce Clause jurisprudence.

The district court granted the government’s motion to dismiss, however, and MSSA appealed to the Ninth Circuit. Now on appeal, Cato has joined the Goldwater Institute to file an amicus brief supporting the MSSA and arguing that federal power does not preempt Montana’s ability to exercise its sovereign police powers to facilitate the exercise of individual rights protected by the Second and Ninth Amendments. More specifically, for federal law to trump the MFFA, the government must claim that the Commerce and Necessary and Proper Clauses give it the power to regulate wholly intrastate manufacture, sale, and possession of guns, which MSSA argues is a state-specific market distinct from any related national one.

Our brief argues that federal preemption would violate the “letter and spirit of the Constitution” and that heightened judicial scrutiny is required whenever the federal government invokes an implied power to override state sovereignty. The MFFA should not be preempted because: (1) principles of state sovereignty limit federal power; (2) preemption would violate the federalism framework established in National League of Cities v. Usery; and (3) preemption would not allow state sovereignty to serve its role as a proper check of federal power. The Supreme Court has made clear that Congress is not the sole venue for states and individuals to seek protection from federal overreach and so this case is fundamentally a dispute over federalism—which should allow for state regulation of local matters to flourish in concert with federal power over “truly national” concerns.

Allowing preemption here would have the perverse effect of allowing the federal government to regulate “states as states” while impairing states’ ability to operate in areas of traditional governmental functions. The Ninth Circuit should thus find that district court committed reversible error in dismissing the lawsuit and, as a result, MSSA should be allowed to pursue its case beyond the pleadings stage.

The Ninth Circuit will hear the case of Montana Sports Shooting Association v. Holder in late summer or early fall.