Tag: Commerce Clause

Obamacare Is Bigger than Roe v. Wade

This morning, as expected, the Supreme Court agreed to take up Obamacare.  What was unexpected – and unprecedented in modern times – is that it set aside five-and-a-half hours for the argument.  Here are the issues the Court will decide:

  1. Whether Congress has the power to enact the individual mandate. - 2 hours
  2. Whether the challenge to the individual mandate is barred by the Anti-Injunction Act. - 1 hour
  3. Whether and to what extent the individual mandate, if unconstitutional, is severable from the rest of the Act. - 90 minutes
  4. Whether the new conditions on all federal Medicaid funding (expanding eligibility, greater coverage, etc.) constitute an unconstitutional coercion of the states. - 1 hour

In addition to the length of argument, which we can expect to be heard over multiple days in March or April, perhaps the biggest surprise is the Court’s decision to review that fourth issue.  There is no circuit split here – in large part because 26 states are already in this one suit – and no judge has yet voted to uphold what also be described as a claim that the federal government is “commandeering” the states to do its bidding.  The Court probably took the case precisely because so many states have brought it; that former solicitor general Paul Clement is their lawyer also doesn’t hurt.  As a practical matter, this could be a bigger deal than the individual mandate because, while Congress had never before tried an economic mandate, it certainly does attach plenty of strings to the grants it gives states – and the spending power is thought to be even broader than the power to regulate commerce.

In any event, the Supreme Court has now set the stage for the most significant case since Roe v. Wade.  Indeed, this litigation implicates the future of the Republic as Roe never did.  On both the individual-mandate and Medicaid-coercion issues, the Court will decide whether the Constitution’s structure – federalism and enumeration of powers – is judicially enforceable or whether Congress is the sole judge of its own authority.  In other words, do we have a government of laws or men?

The Christmas Tree Tax Is a Microcosm of What’s Wrong with Constitutional Law

Jim Harper beat me to the punch on the new Christmas tree tax – probably because I initially thought it was a joke – but there’s actually much more to say here beyond the USDA’s claim that it’s not a tax and the general absurdity of the situation.  Three quick things:

First, there are obvious Free Exercise and Equal Protection issues here.  That is, unless we consider Christmas trees to be wholly secular, this is an obvious burden on the free exercise of Christianity, and one that no other religion faces.  Even if it might be reasonable to see Christmas trees as not particularly religious – pine trees played no role in The Greatest Story Ever Told and, e.g., my secular Jewish family always had a traditional Russian New Year’s Tree (which has no ties to Russian Orthodox Christianity) – but do we want courts drawing lines between, say, creches/crucifixes and trees/Santa?

Second, and probably even more important given the times in which we live, where in the Constitution does the federal government get the power to tax the sale of a local agricultural product?  Setting aside trees trucked in from out-of-state, there’s no interstate commerce here to regulate.  And if it’s a tax (which, again, Ag officials deny) – presumably an excise, which is specified in the Constitution and which courts have construed to be a tax on transactions or privileges – how does assessing it to promote the general welfare or common defense?  The administration cites the Commodity Promotion, Research and Information Act of 1996, under which the tax mandatory fee funds a new program to ”enhance the image of Christmas trees and the Christmas tree industry in the United States.”  That’s what passes for the general welfare? 

Third, even if the tax is a lawful use of federal power, shouldn’t Congress be the body levying it, rather than an agency of the USDA?

I could go on, but this little 15-cent tree tax is a microcosm of what’s wrong with constitutional law, evermore divorced from the Constitution as it is.  Yes, under modern doctrine, the Christmas tree tax can be probably justified under either the Commerce Clause or the General Welfare Clause – and Congress can delegate to bureaucrats the power to levy certain “assessments” – but is that the kind of government we signed up for?

h/t Cato legal associate Chaim Gordon

D.C. Circuit Paves Way for Supreme Court Consideration of Obamacare

Today the D.C. Circuit ruled that the individual mandate is a constitutional exercise of federal power under the Commerce Clause.  Senior Judge Laurence Silberman (Reagan appointee) wrote the opinion, which was joined by Senior Judge  Harry Edwards (Carter appointee).  Judge Brett Kavanaugh (George W. Bush appointee) dissented on jurisdictional grounds without reaching the merits, finding that the Anti-Injunction Act barred the suit until the individual mandate/penalty/tax goes into effect.  (The case is Seven-Sky v. Holder; see Cato’s amicus brief and a quick breakdown by Tim Sandefur.)

Sure, this is a loss for our side but it’s not a big deal. Every development in the Obamacare litigation has been anticlimactic since the Eleventh Circuit split with the Sixth, guaranteeing that the Supreme Court would take the case.  Today’s ruling, therefore, is notable not so much for its result – upholding the individual mandate – as for the reluctance with which it reached it.  

After acknowledging the novelty of the power Congress is asserting, the court expressed concern at “the Government’s failure to advance any clear doctrinal principles limiting congressional mandates that any American purchase any product or service in interstate commerce.”  In other words, the majority saw itself bound by the Supreme Court’s broad reading of federal power under the Commerce Clause but felt “discomfort” at reaching a result that seemingly had no bounds.  

Indeed, the government has yet to tell any court in any of the cases what it cannot do under the guise of regulating interstate commerce.  But rest assured that the Supreme Court will ask again, and soon – it considers the myriad cert petitions later this week.  And if the high court is as unsatisfied with the government’s jurisprudential non-theory as the D.C. Circuit was, it will not hesitate to strike down this expansion of federal power. 

“Federalism is more than an exercise in setting the boundary between different institutions of government for their own integrity,” wrote Justice Kennedy for a unanimous Court last term (United States v. Bond).  “Federalism secures the freedom of the individual.” 

I am confident that the Supreme Court will not allow this unprecedented invasion of individual liberty.

Obamacare Legal News Gone Wild

Developments in the Obamacare lawsuits are coming at us so quickly that it’s hard to keep up.  After a month and a half of speculation on what the administration would do after it lost in the 26-state/NFIB lawsuit (Florida v. U.S. Dept. of Health & Human Services), in the last week the D.C. Circuit heard argument in yet another case on appeal, the government decided not to seek en banc review in the Eleventh Circuit, yesterday we went from zero to three cert. petitions in that case, and the government filed a reply in the Thomas More (Sixth Circuit) case.  Here’s a breakdown:

1. D.C. Circuit Argument

This past Friday, the D.C. Circuit heard the appeal of Seven-Sky v. Holder (in which Cato filed this brief).  There wasn’t much media coverage, in part because the reporting came in on a Friday afternoon but more because the appellate developments after the Eleventh Circuit created a split from the earlier pro-government Sixth Circuit ruling are somewhat anticlimactic – because the action has moved to the Supreme Court.  I attended the hearing and can report a few key points:

(a) The government still has not managed to come up with an example of something it cannot do under its reading of the Commerce Clause.  This is shocking.  Solicitor General Verrilli (who did not argue here), a word of unsolicited advice before Justice Scalia asks you the same question: come up with a couple of outlandish things and move on.  Unless, you know, you think the government really can do anything it wants if a congressional majority exists for it.

(b) Judge Bret Kavanaugh, Bush II appointee and rising star in the conservative judicial establishment, had some serious concerns regarding the Anti-Injunction Act (the jurisdictional issue on which the Fourth Circuit based its decision to dismiss the Liberty University case).  Beth Brinkmann, arguing for the government and after floundering on the Commerce Clause (see above), seemed to have done a great job in putting Kavanaugh’s mind at ease – or at least getting him over the jurisdictional hump.

(c) Judge Laurence Silberman, Reagan appointee and author of many significant opinions over the years, has a really wide interpretation of government power under Wickard v. Filburn, the 1942 wheat-farming case.  I’m not sure that puts his vote in danger – he was also the one who most went after the government – but it does raise an eyebrow.

(d) Overall, I cautiously predict a 2-1 ruling in favor of the plaintiffs, but we won’t know till later this fall.  For a more detailed analysis of the hearing, see Randy Barnett’s post at the Volokh Conspiracy.

2. No En Banc Review in the Eleventh Circuit

On Monday, the government allowed the deadline for seeking review of the Eleventh Circuit panel ruling by the full court to slip.  Commentators, including myself, had speculated that it might file for en banc review in an attempt to push the inevitable Supreme Court ruling past the 2012 election.  That didn’t happen, and here was my press statement:

En banc rehearing would have been legally futile and politically damaging, so the government made the correct decision in not seeking it. We can now expect the solicitor general to ask the Supreme Court to review the Eleventh Circuit’s decision to strike down the individual mandate while leaving the rest of Obamacare standing. The certainty that such review will provide to a nation battered by this among so many other pieces of economically harmful administration policies cannot come soon enough.

The government’s inactivity here, as it were, provoked a flurry of coverage.  I agree with the analysis that Peter Suderman put up at Reason

3. NFIB Files Cert. Petition

Early yesterday (Wednesday) morning, the National Federation of Independent Business and two individuals asked the Supreme Court to review the one issue on which they lost before the Eleventh Circuit: severability.  That is, despite the government’s concession that at least the community-rating and guaranteed-issue provisions are inextricably tied to the individual mandate, and the obvious practical observation that none of the legislation would’ve passed without the mandate, the Eeleventh Circuit reversed Judge Vinson’s ruling on this point and only struck down the mandate.  The petition also makes the point that the Eleventh Circuit case presents the best Supreme Court “vehicle” among all the lawsuits because it most cleanly presents the relevant issues and doesn’t face lingering concerns over standing.   It’s a strong and aggressively worded brief which makes for a good read.  Here was my press statement:

The NFIB’s cert petition forces the Supreme Court to grapple not simply with the individual mandate’s constitutional defects but with the fatal flaws those defects expose in the overall legislation. The regulatory burden and economic uncertainty – let alone direct financial cost – that Obamacare imposes on individuals, businesses, states, and the nation as a whole are part and parcel of a noxious scheme centered on the individual mandate. The Court should grant this petition and thus begin putting an end to the government’s doomed – and unconstitutional – attempt to control our lives.

Randy Barnett, who’s now part of the NFIB legal team (which is led by veteran appellate litigator Mike Carvin), has this useful post about the petition’s treatment of the Anti-Injunction Act.

4. 26 States File Cert. Petition

On the heels of the NFIB filing, the 26 states in the Florida-led lawsuit filed their own cert. petition yesterday.  “Time is of the essence,” lead counsel (and former solicitor general) Paul Clement argues. “States need to know whether they must adapt their policies to deal with the brave new world ushered in by the ACA.”  The petition asks the Court to review three questions:

(a) Does the threat to withhold all Medicaid funding if states don’t agree to Obamacare’s onerous new conditions on that program constitute impermissible coercion by the federal government? [The Eleventh Circuit said no.]

(b) May Congress treat states no differently from any other employer when imposing invasive mandates as to the manner in which they provide their own employees with insurance coverage?  [This is a new formulation of a claim that hasn’t gotten much attention, and focuses on the somewhat idiosyncratic 1985 Supreme Court decision in Garcia v. San Antonio Metropolitan Transit Authority.]

(c) Does the individual mandate exceed federal power and, if so, can it be severed from the rest of the law?

I’ve only skimmed this petition, but it too is a hard-hitting and elegant presentation of serious issues.

5. Solicitor General Files Cert. Petition

Around lunchtime yesterday, the government filed its own cert. petition.  (The parties were all clearly playing a high-stakes game of legal chicken; once the govenment declined to pursue en banc review, the NFIB incorporated that fact into a petition that it had clearly been considering filing preemptively, its co-plaintiff states soon followed, and the government’s hand was forced to throw its petition – which had obviously also been in the final stages – into the filing cascade. Note that yesterday was not any sort of deadline for seeking Supreme Court review!) 

The new solicitor general, Donald Verrilli, of course asks the Court to address whether the individual mandate is constitutional, but also, curiously, whether the challenges are barred by the Anti-Injunction Act.  On this second point, the government argues that the AIA does not apply but asks the Court to appoint an amicus to argue that it does, effectively to defend the Fourth Circuit’s position.  This is unusual.  The SG is essentially saying that he would prefer to win on the merits but will accept a technical victory so long as he doesn’t have to argue for it.  (This accords with my prediction that the Court will either rule for the plaintiffs or find a procedural way of avoiding the merits while allowing the individual mandate to stand.)

6. Government Responds to Thomas More’s Cert. Petition

There was one actual deadline yesterday, and the government met it: It filed a response (not labeled “opposition” as is typically the case) to the cert petition in Thomas More Law Center v. Obama, the case coming out of the Sixth Circuit.  As expected given its earlier filing, the government asked the Court to hold this petition pending resolution of Florida v. HHS.  There’s really nothing to this filing beyond expressing that position.

Conclusion

The day we’ve all been awaiting since President Obama signed his health care law in March 2010 – the Supreme Court’s ruling – is nigh.  Normally the parties on the other side of cert. petitions have 30 days to respond, after which the Court considers the filings, issues a cert. grant or denial (here a grant of some kind), and sets the case for argument a few months in the future to allow time for briefing on the merits.  In Florida v. HHS, however, all the parties – the government, the states, the NFIB/individual plaintiffs – are requesting cert., so I’m not sure what value they or the Court would get from responsive filings (which would be due Oct.27).  Regardless of that wrinkle, the Court is likely to grant cert. sometime in November – or in any case by the end of the year – and set argument for March or April. 

So we’re on track for a decision that glorious last week of June when the Court releases its most pressing opinions and gets the heck out of Dodge.

Does PPACA’s Mandate ‘Carry into Execution’ the Commerce Power?

The Obama administration contends that its mandate to purchase health insurance is “necessary and proper” to effect PPACA’s comprehensive scheme of interstate health care regulation. The constitutional argument is two-part: First, the Commerce Clause empowers Congress to regulate interstate health care. Second, the Necessary & Proper Clause empowers Congress to implement health care regulation by directing individuals to acquire medical insurance or pay a penalty. The administration concedes that the underlying purpose of the mandate is to subsidize insurance companies so they can afford to cover pre-existing conditions, which PPACA commands.

Consider the text of the Necessary & Proper Clause. It authorizes Congress “To make all Laws which shall be necessary and proper for carrying into Execution … all other Powers vested by this Constitution in the Government of the United States.” For example, Congress’s power to spend—which is not expressly mentioned in the Constitution—is necessary for carrying into execution numerous other powers that entail the expenditure of money. Also, the Supreme Court has determined that Congress’s power to regulate intrastate commerce may occasionally be necessary for carrying into execution Congress’s enumerated power “To regulate Commerce among the several States.” Similarly, Congress’s power to establish a federal penal system may be necessary for carrying into execution Congress’s enumerated power “To provide for the Punishment of counterfeiting” and certain other crimes.

All those implied powers are instrumental. They afford a means by which other express powers can be carried into execution. By contrast, PPACA’s health insurance mandate does not carry into execution any express power, including the Commerce Power to regulate interstate health care. Indeed, health care regulation—even with its requirement that insurers cover pre-existing conditions—could have been implemented without the mandate, in which case insurance companies would have been compelled to raise premiums, cut other costs, or accept lower profits.

Instead of carrying health care regulation into execution, the mandate is designed solely to produce a specified outcome for the benefit of private insurers—i.e., to subsidize insurers so they don’t have to raise premiums, cut other costs, or accept lower profits. In other words, the mandate is simply a cost distribution scheme: a policy judgment having nothing to do with facilitating execution and everything to do with who pays the bill. Because the mandate relates to outcome and not process, it cannot be prerequisite for carrying into execution the Commerce Power. Accordingly, it cannot be authorized under the Necessary & Proper Clause, the sole purpose of which is to carry other powers into execution.

Constitutional Structure Matters: A Response to Larry Tribe

SCOTUSblog’s symposium on the constitutionality of Obamacare – to which I contributed, as did Bob Levy – provides a glimpse at the astonishing views of the law’s supporters.  It particularly shows how divorced the legal academy’s leading lights are not only from basic constitutional text and structure, but from jurisprudential reality.

Most prominently, in responding to the Eleventh Circuit’s decision striking down the individual mandate (and to Richard Epstein’s symposium essay), storied Harvard professor Laurence H. Tribe criticizes the court for “reflecting what appears to be a widely held public sentiment” that Congress cannot “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”  That sentiment is a problem, according to Tribe, because it elevates form over substance.  That is, just as it has done with Social Security, Congress could (under modern jurisprudence, which is wrong as a matter of first principle but not at issue in the Obamacare lawsuits) levy another income or payroll tax and use that revenue to provide health insurance and/or care for otherwise uninsured individuals:

Put otherwise, Congress may undoubtedly use its taxing power to mandate that individuals pay for coverage supplied by private insurers, so long as it acts in two steps: step 1, impose a tax, and step 2, use the proceeds of the tax to fund privately provided health insurance for each individual. If Congress may accomplish this objective in two steps, why not in one? No federalism or liberty-related concern, whether the dignity of the states or that of individuals, is served by denying Congress that authority.

Tribe’s reasoning echoes Justice Breyer’s reason (in dissent) for rejecting the notion that the Takings Clause applies when the Government orders an individual to pay another individual, in the case of Eastern Enterprises v. Apfel:

The dearth of Takings Clause author­ity is not surprising, for application of the Takings Clause here bristles with conceptual difficul­ties. If the Clause applies when the government simply orders A to pay B, why does it not apply when the government simply orders A to pay the government, i.e., when it assesses a tax?

But there is a very good reason why courts should deny Congress the power to compel individuals to purchase products from private parties or, for that matter, the power to order A to pay B – even if a similar result could be accomplished through the taxing power: political accountability. As Georgetown law professor (and Cato senior fellow) Randy Barnett explains:

Like mandates on states, economic mandates undermine political accountability, though in a different way. The public is acutely aware of tax increases. Rather than incur the political cost of imposing a general tax on the public using its tax powers, economic mandates allow Congress and the President to escape accountability for tax increases by compelling citizens to make payments directly to private companies.

Indeed, scholars as diverse as Richard Epstein and Cass Sunstein have argued that the Takings Clause requires just compensation precisely to preserve political accountability in the provision of public goods. As Justice Scalia explained in the case of Pennell v. City of San Jose:

The politically attractive feature of regulation is not that it permits wealth transfers to be achieved that could not be achieved otherwise; but rather that it permits them to be achieved “off budget,” with relative invisibility and thus relative immunity from normal democratic processes.

Under modern jurisprudence, essentially the only check on Congress’s taxing and spending powers under the General Welfare Clause (as opposed to its regulatory power under the Commerce Clause) is political.  So yes, Professor Tribe, there is a constitutional reason for depriving Congress of the power to do in one step what it could surely do in two other steps: to maintain that remaining constitutional qua political check. Indeed, the very reason why Congress adopted the individual mandate was because it lacked the political will – it feared political accountability too much – to impose single-payer universal coverage, where the government would first impose a tax on everyone and then provide health care (at this point it’s no longer “insurance”) to everyone.

To accomplish the same result without having to impose significant new taxes – as President Obama famously promised there would not be – Congress tried to evade political accountability through the individual-mandate mechanism. That’s why the Eleventh Circuit wisely declined to grant Congress the power to move a significant part of its spending “off budget” and “mandate that individuals enter into contracts with private insurance companies for the purchase of an expensive product from the time they are born until the time they die.”

Cato legal associate Chaim Gordon co-authored this blogpost.