The D.C. Circuit Grants En Banc Review of Halbig

My reaction to the D.C. Circuit’s decision to grant en banc review of Halbig v. Burwell in a nutshell:

  1. It is unnecessary.
  2. It is unwise.
  3. It is unfortunate.
  4. It appears political, as would a decision to overrule Halbig.
  5. It will likely only delay Supreme Court review.
  6. En banc review does not necessarily mean the court will overturn Halbig, though it doesn’t look good.
  7. I predict that even if the court overturns Halbig, the Obama administration will lose ground.
  8. The D.C. Circuit will not have the last word.

If you want to go outside the nutshell, where I unpack all this with more words and facts and links, go here

The D.C. Circuit Vacates Its Panel’s Halbig Decision

A quick note on unfortunate happenings at the U.S. Court of Appeals for the D.C. Circuit this morning: The court vacated its excellent July 22 decision in Halbig v. Burwell, which had held that Obamacare’s plain language precluded the federal government from subsidizing the health insurance premiums of policies people obtain through exchanges established by the federal government. Just hours after that July 22 decision came down, the Fourth Circuit Court of Appeals ruled the other way on the question in King v. Burwell, setting up a circuit split and a reason for the Supreme Court to promptly decide the question, especially given the scope and magnitude of the issues at stake (36 states have declined to establish state exchanges, for which Obamacare does provided subsidies).

Thus, with the D.C. Circuit now having vacated its three-judge panel’s decision and having agreed to rehear the case en banc (by the entire court), there is no longer a circuit split and less urgency for the Supreme Court to take up the issue. Other cases challenging the federal subsidies are coming along, but for the moment, this is where things are. For more on these issues, see Ilya’s latest post and a WSJ op-ed by Adam White, both written before this morning’s decision. It’s rare for any circuit, but especially for the D.C. Circuit, to grant en banc rehearings. But then nothing has been normal about Obamacare, which is what you should expect when so politicized a program is thrust upon the nation.

Supreme Court Must Resolve Obamacare Chaos

When the Affordable Care Act was being debated in Congress, former House Speaker Nancy Pelosi infamously insisted that “we have to pass the bill to find out what’s in it.”  It turns out, however, that the Obama administration—which has been making it up as it goes along with regard to ACA enforcement—doesn’t care “what’s in it.”

The IRS in particular has been implementing Obamacare as it thinks the law should be, not as it is. The ACA encourages states to establish health insurance exchanges by offering people who get their health coverage “through an Exchange established by the State” a tax credit—a subsidy to help them pay their premium. In the event a state declines to establish an exchange, Section 1321 further empowers the Department of Health and Human Services to establish federal exchange in states that decline to establish their own exchanges (without providing for the premium subsidy).

When, contrary to the expectations of the law’s achitects, 34 states declined to establish an exchange—two more have since failed—the IRS decided that those getting their insurance on federally established exchanges should qualify for tax credits regardless of the statutory text. In conflict with the U.S. Court of Appeals for the D.C. Circuit in a similar case called Halbig v. Burwell, the Fourth Circuit in King v. Burwell found the legal text to be ambiguous and thus deferred to the IRS interpretation.

The so-called Chevron doctrine counsels that statutory text controls when Congress has spoken clearly on an issue. But where Congress is ambiguous or silent, the agency can fill the regulatory gap with its own rules and policies. The problem here is that the ACA’s text was not ambiguous and there is no evidence that Congress intended to delegate to the IRS the power to determine whether billions of taxpayer dollars should annually be dispersed to those purchasing health care coverage on federal exchanges. That the Fourth Circuit has bent over backwards to accommodate the administration’s latest Obamacare “fix shows that it, too, is not so concerned with “what’s in” the law. 

To that end, Cato joined four other organizations to support the plaintiffs’ petition for review by the Supreme Court. Our brief argues that the Court should hear the case because it offers the opportunity to reverse potentially grave harm to the separation of powers, to correct a misapplication of the Chevron doctrine, and to restore the idea that drastically altering the operation of a major legislative act belongs to the political process and not in a back rooms of an administrative agency. Just because those who voted for the ACA didn’t care what it said doesn’t mean that the executive and judicial branches should also turn a blind eye.  

To see the legal machinations now at play in these cases regarding the Obamacare-IRS-tax-credit, see my recent op-ed in the National Law Journal. Since that was published this past Monday, the government received a 30-day extension in which it has to file its response to the King cert petition. That means that the Supreme Court will be considering at some point next month whether to take the case.

For Cato’s previous briefs in Halbig and King, respectively, see here and here.

FSOC’s Arbitrary, Ever-Changing Double Standard

In the Dodd-Frank Act, Congress, without irony, decided the best way to end “too big to fail” was to have a committee of regulators label certain companies “too big to fail.”  That committee, established under Title I of Dodd-Frank, is called the Financial Stability Oversight Council (FSOC) and is chaired by the Treasury Secretary. Like so much of Dodd-Frank, FSOC gets to write its own rules. Unfortunately FSOC won’t even write those rules, but instead it has decided that it knows systemic risk when it sees it. This has led to an ad hoc process that almost makes the bailouts of 2008 look systematic.

Compare the process for asset management firms and that for insurance companies. In late 2013, the Treasury released a report on the asset management industry. It was widely viewed as an attempt to make the case for labeling some asset management firms “systemic.”  The report was widely criticized. Such criticism did not stop FSOC from conducting a public conference on the asset management industry in May 2014.  Whether it was the public reaction to the conference or the paper, FSOC has largely abandoned labeling asset managers as “too big to fail.”  That was an appropriate outcome as firms in that industry are not systemic and shouldn’t be lead to expect a federal rescue.

Now don’t get me wrong: A shoddy report and a conference do not constitute a thorough process. As someone who has overseen a rulemaking process, I can say they do not even meet the basics of the Administrative Procedures Act. But just when that process seemed wholly inadequate, along comes the “process” for insurance companies.

Not unexpectedly, AIG went along without a peep. Given its role in the crisis that’s not a surprise. But there’s been no report or even a conference on whether insurance companies pose systemic risk. Completing either one would, of course, require FSOC to define systemic risk and to offer some minimal metrics. Instead, what we have is unelected bureaucrats simply making it up as they go along.

And here I was thinking Dodd-Frank was meant to end the haphazard behavior of regulators in 2008 and lead us towards a predictable rules-based approach to ending systemic risk!

Vehicle Fleet Mess at Homeland Security

Duplication and waste are common themes within the Department of Homeland Security. A recent report from the DHS inspector general (IG) provides another example of wasted tax dollars.

The federal government owned or leased 650,000 motor vehicles in fiscal year 2012. DHS’s fleet was the government’s second largest, consisting of 56,000 vehicles. This armada of cars and trucks cost taxpayers $534 million in 2012. Given the large expense, the IG reviewed a portion of the DHS fleet, 753 vehicles, “to determine whether, for FY2012, the Department met requirements to right size the composition of its motor vehicle fleet, [and] eliminate underused vehicles.”

The IG found that DHS vehicle management is poor. Vehicle identification numbers were not listed correctly for 39 percent of vehicles. Fifty-four percent of acquisition dates did not match other department records. The most damning finding was that 59 percent of vehicles were underused, meaning they were driven less than 12,000 miles, the governmental standard, in one year. Apparently, DHS has far too many cars and trucks, even assuming that the vehicles are used for efficient purposes.

The IG found that DHS does not purge unnecessary vehicles. Eighty-six percent of the underused vehicles were still owned by the department a year later. DHS was unable to provide documentation justifying vehicle retention and the additional expense.

These results led the IG to conclude: “we estimate that operating these underused vehicles cost between $35.3 million and $48.6 million. For these reasons, DHS cannot ensure its vehicle fleet composition is cost efficient, complies with department requirements, and has the correct number of motor vehicles to accomplish this mission.”

This is not the first time DHS has been criticized for its handling of its vehicle fleet. In 2013, the Government Accountability Office criticized DHS for similar problems, including incomplete data and failing to adequately analyze and utilize its vehicles. DHS is also not the only agency with underutilized vehicles, as GAO has been highlighted for years.

The federal government spends $3 billion annually on its vehicle fleet, excluding the United State Postal Service. This should be an area in which bipartisan reforms are possible.

Opinions of Climate Change: Related to Dependency on Government Money?

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

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In our post last week titled “Climate Alarmism: When is this Bozo Going Down?” we described how new research increasingly casts doubt on the validity of climate models and their projections of future climate change.  It is increasing clear that climate models simply predict too much warming from human greenhouse gas emissions. 

But the scientific community, or at least that part of it which makes its living off climate alarm, is slow to accept this.

Who can blame these folks?  More money flows from the government into universities (or government labs) to study the effects of climate change if we all agree that human greenhouse gas emissions are leading to climate change of a dangerous magnitude.

So it is left to the emeritus or retired profs to lay bare the truth.

A fine example of this can be found in a recent article in the New York Times’ DotEarth blog run by ex-Times science reporter Andy Revkin. In his story looking into the implications of new scientific findings concerning the potential impacts of ocean circulation variability on our understanding of the behavior the global average surface history (parts of which we described in our last post), Revkin interviewed four prominent climate researchers.  The level of confidence that each showed in the mainstream (climate model-driven) global warming meme (despite this new research suggesting that something may be rotten in the state of Denmark) appears proportional to how much professional advancement still lies ahead.

Uber Signups Soar Following German Ban

Uber has experienced an explosion in signups in Germany after a Frankfurt court handed down a temporary injunction banning the transport technology company. The countrywide ban follows a suit brought against Uber by Taxi Deutschland, an association of taxi dispatchers. Taxi Deutschland claimed that Uber did not have the necessary permits to operate. Under German law, drivers without a commercial licenses can pick up passengers as long as they do not charge more than the operating costs for the ride.

The Telegraph notes that Uber says it will continue to operate in Germany despite Taxi Deutschland claiming it will seek a fine of as much as €250,000 every time Uber provides a service without a license.

Since the injunction was issued, Uber claims that it has experienced a larger than 500 percent increase in signups compared to the same period last week in some parts of Germany. As City A.M.’s Guy Bentley notes, the Uber app has been downloaded in parts of Germany where Uber drivers do not operate:

The taxi app company doubled signups in all five German cities where it operates, with demand in both Hamburg and Düsseldorf rising over 500 per cent. Even people who don’t live in cities where Uber operates are downloading the app, perhaps in an act of capitalist solidarity. Uber now ranks in the top ten most downloaded apps in Germany.

According to Uber, the increased signups on September 2 in the five German cities where it operates compared to the same period last week are as follows:

- Uber Hamburg up 590 percent

- Uber Dusseldorf up 518 percent

- Uber Munich up 329 percent

- Uber Berlin up 270 percent

- Uber Frankfurt up 228 percent

I noted in July that, according to Uber’s U.K. general manager, Uber enjoyed an 850 percent increase in British signups in one day following a London black cab protest against how Uber was being treated by London’s transportation agency.

Taxi companies are understandably frustrated by the rise of Uber and will continue to seek legal means to stifle the company’s growth. However, events in Germany and the U.K. have shown that attacks on Uber can provide the company with welcome exposure and new customers.