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Instant Analysis: Association of American Railroads v. U.S. Department of Transportation (CADC)

April 29th, 2016

Last March, the Supreme Court decided Department of Transportation v. Association of American Railroads. The case raised all sorts of constitutional challenges to how Amtrak can set “metrics and standards” that affect its competitors. Writing for eight Justices, Justice Kennedy found that Amtrak was a governmental entity, and remanded to the D.C. Circuit whether the “metrics and standards” violate the separation of powers and the appointments clause. Justice Alito issued a vigorous opinion raising several other constitutional questions, including whether there is an appointments clause violation, the non-delegation doctrine, and other admin-law abuses.  Justice Thomas’s concurring opinion went the full Hamburger, and would have voted to reconsider the development of administration law since the Pope annulled Magna Carta.

On remand from the Supreme Court, a D.C. Circuit panel of Judges Brown, Sentelle, and Williams ruled against Amtrak–in an absolutely fascinating opinion. The Court finds not only a violation of the appointments clause–following Justice Alito’s lead–but also finds a due process violation under the precedent of Carter v. Carter Coal. Judge Brown’s opinion–which is almost certainly going to be subject to an en banc petition–is worthy of a careful study.

Here is the introduction of her opinion:

For the freight operators who challenged PRIIA, however, that decision left three questions unanswered. Conceding Amtrak’s governmental status, the operators— represented by the Association of American Railroads—ask: Does it violate due process for an entity to make law when, economically speaking, it has skin in the game? Does it violate the Appointments Clause for Congress to vest appointment power of a principal officer in the Surface Transportation Board? And is a government corporation whose board is only partially comprised of members appointed by the President constitutionally eligible to exercise regulatory power? We decline to reach the latter question, but we side with the freight operators on the former two. We conclude PRIIA violates the Fifth Amendment’s Due Process Clause by authorizing an economically self-interested actor to regulate its competitors1 and violates the Appointments Clause for delegating regulatory power to an improperly appointed arbitrator.

Judge Brown’s opinion begins with a tribute to Magna Carta, and its influence on our Due Process Clause:

No clause in our nation’s Constitution has as ancient a pedigree as the guarantee that “[n]o person . . . shall be deprived of life, liberty, or property without due process of law.” U.S. CONST. amend. V. Its lineage reaches back to 1215 A.D.’s Magna Carta, which ensured that “[n]o freeman shall be . . . disseised of his . . . liberties, or . . . otherwise destroyed . . . but by lawful judgment of his peers, or by the law of the land.” Magna Carta, ch. 29, in 1 E. Coke, The Second Part of the Institutes of the Laws of England 45 (1797). …

Curbing the misuse of public power was the aim of the Magna Carta, and the Supreme Court has consistently concluded the delegation of coercive power to private parties can raise similar due process concerns.

To resolve this case, Judge Brown turns back to a pre-1937 precedent, Carter v. Carter Coal.

The abstract legal question at the heart of this case is whether it violates due process for Congress to give a self- interested entity rulemaking authority over its competitors. The Supreme Court has confronted the question only once. See Carter v. Carter Coal Co., 298 U.S 238 (1936).

In case you were wondering, the due-process component of Carter v. Carter Coal was never overturned by the Supreme Court. As we learned in NFIB v. Sebelius, Bailey v. Drexel Furniture and other pre-switch-in-time cases–no matter what the professoriate may say– are still on the books. (I actually researched Carter v. Carter Coal for the proposition of shareholder derivative standing, so was familiar of its ongoing validity).

In a sentence that must make the blood boil of all post-New Dealers, Judge Brown writes:

We conclude, as did the Supreme Court in 1936, that the due process of law is violated when a self-interested entity is “intrusted with the power to regulate the business . . . of a competitor.” Carter Coal, 298 U.S. at 311.

During oral arguments, Justice Breyer charged counsel for respondents with going “back to Lochner.”

JUSTICE BREYER: Going back to Carter v. Carter Coal.

MR. GANNON: Yes.

JUSTICE BREYER: We could go back to Lochner.

Brown reads Carter v. Carter Coal as standing for the proposition that Congress cannot delegate power to self-interested firms that use that power to nakedly promote their self-interest.

The power to self-interestedly regulate the business of a competitor is, according to Carter Coal, anathema to “the very nature of things,” or rather, to the very nature of governmental function. Delegating legislative authority to official bodies is inoffensive because we presume those bodies are disinterested, that their loyalties lie with the public good, not their private gain. But here, the majority producers “may be and often are adverse to the interests of others in the same business.” Id. That naked self-interest compromised their neutrality and worked “an intolerable and unconstitutional interference with personal liberty and private property.” Id. Accordingly, the Court invalidated the Act as “so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment.”

Note that this is not a reversal of the normal rational-basis standard for substantive due process cases, but rather a species of the non-delegation doctrine as applied through the due process clause. But you can be sure that is how the government will characterize it.

The court takes a deep dive into the Framer’s views of rationally-self interested government officials, who would use the power of the state to aggrandize their own authority.

In fact, our Constitution’s ingenious system of checks and balances assumes government officials will act self-interestedly. “Happy will it be if our choice should be directed by a judicious estimate of our true interests, unperplexed and unbiased by considerations not connected with the public good,” the very first installment of the Federalist Papers opined. The Federalist No. 1, at 33 (C. Rossiter ed., 1961) (Hamilton). “But it is a thing more ardently to be wished than seriously to be expected.” Id. And as Alexander Hamilton observed elsewhere: “We may preach till we are tired of the theme, the necessity of disinterestedness in republics, without making a single proselyte.” Alexander Hamilton, The Continentalist No. IV, in 3 The Papers of Alexander Hamilton 99, 103 (Harold C. Syrett ed., 1962). Self-interested lawmaking was not some shocking aberration; it was an unwelcomed expectation, one our Constitution endeavored to channel and check. See The Federalist No. 51, at 321–22 (Madison) (C. Rossiter ed., 1961) (“Ambition must be made to counteract ambition.”).

Ambition must be made to counteract ambition. I couldn’t have said it better than myself.

With this framework, Judge Brown finds that Amtrak is self-interested:

 Amtrak’s self-interest is readily apparent when viewed, by contrast, alongside more traditional governmental entities that are decidedly not self-interested. The government of the United States is not a business that aims to increase its bottom line to achieve maximum profitability. Unlike for-profit corporations, government strives—at least in theory—for an equilibrium of revenues and expenditures, where the revenue obtained is no more and no less than the operating costs of the services provided. Amtrak’s charter stands in stark contrast. Its economic self-interest as it concerns other market participants is undeniable.

Under Carter Coal, such a delegation cannot stand:

Armed with coercive regulatory power, Amtrak wields a weapon of considerable advantage in its competitive battle for scarce track. And while the Constitution may grudgingly accept the reality of self-interestedness, it does not endorse it as an unmitigated good.

Congress delegated its legislative power to an entity that it designed to be the opposite of “presumptively disinterested.” Carter Coal, 298 U.S. at 311. Like coal competitors, whose “diversity of view[s]” concerning the challenges of the industry “[arose] from their conflicting and even antagonistic interests,” id., the antagonistic interests of freight operators and Amtrak transform the development of new performance metrics and standards into an unfair game of zero sums.

Judge Brown, joined by Sentelle, previously issued a concurring opinion in Hettinga v. United States that cast serious doubt on the Court’s post-1937 jurisprudence.

The court also finds a violation of the appointments clause, which I will try to address in a later post.

As the foregoing analysis suggests, among the Framers’ chief concerns at the constitutional convention were questions of who should be permitted to exercise the awesome and coercive power of the government. Tyrannous abuse of that power precipitated revolution against Great Britain. Overly restrictive access to it crippled our young nation under the Articles of Confederation. The novel equipoise the Constitution struck was to vest the legislative, executive, and judicial powers in independent branches of government and then empower each to check the others.

One last note. In the event that this case goes en banc, the math is funny because there were two senior judges (Sentelle and Williams) on the panels. The two senior judges don’t get to vote for the case to go en banc, but they do get to sit on the en banc court. If it goes en banc, there would be six judges appointed by Republican Presidents (Brown, Sentelle, Williams, plus Henderson, Griffith, and Kavanaugh). With Garland recused, there would be six judges appointed by Democratic presidents (Rogers, Tatel, Srinivasan, Millett, Pillard, and Wilkins).

As Sean Marotta pointed out on twitter, per D.C. Circuit Rule 35(d), a 6-6 en banc vote affirms “the decision under review.”

If the en banc court divides evenly, a new judgment affirming the decision under review will be issued.

But this case was on direct remand from the Supreme Court. The panel decision today addressed issues that were not addressed by the District Court, and that were decidedly left open by the Supreme Court’s decision. I think this would have the effect of “affirming” the judgment for the government, without endorsing any of the reasons why they win. This lineup could ensure that the issue makes a repeat trip to SCOTUS.

Instant Analysis of “Executive Actions to Reduce Gun Violence and Make Our Communities Safer”

January 4th, 2016

Tonight the White House released a “Fact Sheet” discussing the executive actions the executive branch will take with respect to gun control. Not even President Obama has figured out how give a “Fact Sheet” the force of law–he’s trying, I’m sure–so the only important aspects of the lengthy document are whether an agency is proposing a rule, whether a rule is being finalized, or whether the President issued a directive to an agency. Everything else, as they say, is hortatory fluff. (Update: Thanks to Sean Marotta, who found that many of the finalized rules were proposed some time ago).

First, ATF is “finalizing a rule” to expand the scope of people who are required to run background checks prior to selling guns.

ATF is finalizing a rule to require background checks for people trying to buy some of the most dangerous weapons and other items through a trust, corporation, or other legal entity.

The President did not set a specific number of sales that triggers the rule, as many feared. (Update: Sean found the proposed rule was put out in 2013).

Second, ATF is “finalizing a rule” concerning lost or stolen firearms:

ATF is finalizing a rule to ensure that dealers who ship firearms notify law enforcement if their guns are lost or stolen in transit.

(Update: Sean found the proposed rule was put out in 2014).

Third, the Social Security Administration “has indicated that it will begin the rulemaking process” to prohibit people with certain mental illnesses–that render them unable to manage their own finances–from owning guns. (Note that they will go through the rulemaking process for this one, as it includes certain due process rights for those denied the right).

The Social Security Administration has indicated that it will begin the rulemaking process to include information in the background check system about beneficiaries who are prohibited from possessing a firearm for mental health reasons.

Fourth, HHS is “finalizing a rule” to make it easier for states to report information about people who are prohibited from owning a gun for mental health reasons.

The Department of Health and Human Services is finalizing a rule to remove unnecessary legal barriers preventing States from reporting relevant information about people prohibited from possessing a gun for specific mental health reasons. … Today, the Department of Health and Human Services issued a final rule expressly permitting certain HIPAA covered entities to provide to the NICS limited demographic and other necessary information about these individuals

Fifth, ATF is “finalizing a rule” that makes it impossible for people to bypass the background check process by using a gun trust.

ATF is finalizing a rule that makes clear that people will no longer be able to avoid background checks by buying NFA guns and other items through a trust or corporation.

This measure, I’m sure, will hinder hardened criminals who hire attorneys to set up gun trusts prior to buying a gun. I know lawyers in blue states who have made an entire practice about building these trusts.

Sixth, ATF “issued a final rule” concerning lost or stolen guns.

Today, ATF issued a final rule clarifying that the licensee shipping a gun is responsible for notifying law enforcement upon discovery that it was lost or stolen in transit.

Seventh, there is a “presidential memorandum” that urges the agencies to investigate smart gun technologies, such as microstamping and fingerprint scanners.

Issue a Presidential Memorandum directing the Department of Defense, Department of Justice, and Department of Homeland Security to take two important steps to promote smart gun technology. …

The Presidential Memorandum also directs the departments to review the availability of smart gun technology on a regular basis, and to explore potential ways to further its use and development to more broadly improve gun safety. …

Millions of dollars have already been invested to support research into concepts that range from fingerprint scanners to radio-frequency identification to microstamping technology.

At first blush this is extremely underwhelming. I’m sure some gun control advocates are livid. But there is more here than meets the eye. My sense is that the President is setting the stage for future legislation actions. Think about what the actions as a whole accomplish. The President is building the framework for a national registry of people who are not fit to own firearms due to “mental health” concerns. By streamlining the process by which states can report this information–through waiver of HIPAA requirements–the President is signaling to blue states that they can tackle gun control at the local level, and this can ultimately be used nationally. Bloomberg and those funding this mission are no fools. Once such a database is built and tested, it will be so easy for a President Clinton to fold that into the instant background check. Additionally, deeming millions of people who are unable to manage their own finances incompetent to own guns is a significant stigmatization of the right to keep and bear arms. This could ultimately be expanded to other forms of state and federal welfare. This mission creep would be particularly insidious. Finally, funding research into the microstamping and finger-print-scanner guns will provide the basis for a future Congress to mandate these technologies for personal use. I don’t believe for a second that the DOD will require service revolvers to be finger-print activated. A similar research-now-legislate-later approach was used in New Jersey.

These regulations will be challenged in court, as Obama knew they would. But it doesn’t matter. This is simply laying the groundwork for future action when a Congress, more to his liking, is able to act. This is a long-game approach to gun control.

Instant Analysis: Zivotofsky v. Kerry

June 8th, 2015

I will add my thoughts about Zivotofsky as I make my way through the opinion.

(more…)

Instant Analysis: Jackson v. San Francisco (2nd Amendment Case)

June 8th, 2015

Today the Supreme Court denied certiorari in Jackson v. San Francisco, a Second Amendment case where the City requires that lawfully-owned handguns must be stored in a locked container or have a trigger lock. Justice Thomas, joined by Justice Scalia, dissented from the denial of certiorari. I explored in a piece in the American Spectator that the Court has denied review of every single 2nd Amendment case since Heller. This case continues that tradition.

The dissent faults the 9th Circuit for effectively disregarding Heller, focusing on the “core protection” of the right.

Despite the clarity with which we described the Second Amendment’s core protection for the right of self-defense, lower courts, including the ones here, have failed to protect it. Because Second Amendment rights are no less protected by our Constitution than other rights enumerated in that document, I would have granted this petition.

Thomas’s dissent makes clear this law, which nullifies the right of self defense if someone is asleep and cannot unlock the gun in time, is in “serious tension” with Heller.

The decision of the Court of Appeals is in serious tension with Heller. …  The law thus burdens their right to self-defense at the times they are most vulnerable—when they are sleeping, bathing, changing clothes, or otherwise indisposed. There is consequently no question that San Francisco’s law burdens the core of the Second Amendment right. That burden is significant.

Next Thomas sketches out the massive circuit split that has emerged since Heller.

Compare Heller v. District of Columbia, 670 F. 3d 1244 (CADC 2011) (“We ask first whether a particular provision impinges upon a right protected by the Second Amendment; if it does, then we go on to determine whether the provision passes muster under the appropriate level of constitutional scrutiny”), with id., at 1271 (Kavanaugh, J., dissenting) (“In my view, Heller and McDonald leave little doubt that courts are to assess gun bans and regulations based on text, history, and tradition, not by a balancing test such as strict or intermediate scrutiny”).

While Justice Thomas does not purport to resolve that issue, he explains the San Francisco law doesn’t survive any scrutiny:

One need not resolve that dispute to know that something was seriously amiss in the deci-sion below. In that decision, the Court of Appeals recog- nized that the law “burdens the core of the Second Amendment right,” yet concluded that, because the law’s burden was not as “severe” as the one at issue in Heller, it was “not a substantial burden on the Second Amendment right itself.” 746 F. 3d, at 963–965.

Thomas turns to the First Amendment to provide a basis to resolve these questions:

But nothing in our decision in Heller suggested that a law must rise to the level of the absolute prohibition at issue in that case to constitute a “substantial burden” on the core of the Second Amendment right. And when a law burdens a constitu- tionally protected right, we have generally required a higher showing than the Court of Appeals demanded here. See generally Heller, 554 U. S., at 628–635; Turner Broad- casting System, Inc. v. FCC, 512 U. S. 622, 662 (1994) (explaining that even intermediate scrutiny requires that a regulation not “burden substantially more speech than is necessary to further the government’s legitimate inter- ests” (internal quotation marks omitted)).

Thomas urges that the Court should have granted the case to set the Circuit straight:

The Court should have granted a writ of certiorari to review this questionable decision and to reiterate that courts may not engage in this sort of judicial assessment as to the severity of a burden imposed on core Second Amendment rights. See Heller, 554 U. S., at 634 (“The very enumeration of the right takes out of the hands of government—even the Third Branch of Government—the power to decide on a case-by-case basis what is really worth insisting upon”); id., at 635 (explaining that the Second Amendment “elevates above all other interests the right of law-abiding, responsible citizens to use arms in defense of hearth and home”).

The denial is especially striking as the Court takes other cases involving constitutional rights.

The Court’s refusal to review this decision is difficult to account for in light of its repeated willingness to review splitless decisions involving alleged violations of other constitutional rights. See, e.g., Glossip v. Gross, 574 U. S. ___ (2015) (cert. granted) (Eighth Amendment); Ontario v. Quon, 560 U. S. 746 (2010) (Fourth Amendment); Hill v. Colorado, 530 U. S. 703 (2000) (First Amendment). In- deed, the Court has been willing to review splitless deci- sions involving alleged violations of rights it has never previously enforced. See, e.g., BMW of North America, Inc. v. Gore, 517 U. S. 559 (1996) (right to limit on punitive damages awards). And it has even gone so far as to review splitless decisions involving alleged violations of rights expressly foreclosed by precedent. See, e.g., Boumediene v. Bush, 553 U. S. 723 (2008) (right of aliens held outside U. S. territory to the privilege of habeas corpus); Lawrence v. Texas, 539 U. S. 558 (2003) (right to engage in adult, consensual same-sex intimate behavior). I see no reason that challenges based on Second Amendment rights should be treated differently. 

 

This echoes a point I made years ago, but has become truer since–the Second Amendment is treated by the Court as a second-class right.

With only Thomas and Scalia in dissent, we can presume that the Chief and Alito are content with maintaining this status quo where the lower courts continue to trivialize Heller.

 

Instant Analysis: Injunction in Texas v. United States

February 17th, 2015

At 10:22 p.m., Judge Hanen issued his long-awaited decision in Texas v. United States, temporarily enjoining DHS from implementing DAPA. (Disclosure: I filed a brief in support of Texas.) The injunction is here. The opinion is here. The 123-page decision is extremely thorough. It spends over 60 pages on standing, and the remainder on the procedural APA claim. It doesn’t even address the Take Care clause.

The opinion has tw0 main parts. First, it finds that the states have standing. Second, it concludes that DHS lacks the discretion to institute DAPA.

The standing analysis tracks closely the arguments advanced by Texas, which I addressed here. In short, DAPA provides legal presence to aliens, who can then obtain drivers licenses in the states. This court concluded (correctly in my mind) that these licenses impose a cost on the states. The DOJ previously argued in the 9th Circuit that it was unconstitutional for Arizona to exclude DACA beneficiaries from receiving drivers licenses. The court found a similar analysis estops the government from claiming Texas can change its laws to deny DAPA beneficiaries licenses. The court (correctly in my mind) rejects the argument that DAPA will cause an influx of illegal immigration. This argument was too speculative. The standing analysis is really thorough. Contrary to what you may think, I am fairly confident this will stand up on appeal. The merits, is another story.

The merits analysis begins on p. 68. On p. 92, the court explains that Congress knows how to “delegate discretionary authority,” and has not done so here.

p.94

On p. 98, the court finds a “complete abdication” under Heckler v. Cheney.

 

98 99

The court also makes a point I address in Part II of my series of DAPA–the Secretary, and not individual officers set the the policies. There is no individual discretion (p. 108).

108

In an extended footnote, the court explains that DHS could not identify a single applicant denied for DACA due to discretionary factors.

109a 110

Although the court doe snot reach the constitutional issue, the “abdication” analysis under the APA claim mirrors what a constitutional “Take Care” analysis would look like. So the court tipped his hand how the constitutional analysis would come out.

The final portion of Judge Hanen’s opinion stresses over, and over again, that a preliminary injunction is warranted to maintain the status quo. This is an important point that has been stressed with the same-sex marriage litigation. Allowing 4 million people to sign up for DAPA cannot be undone. The President has said so himself. From p. 121:

121

I’m certain much of the analysis you will read focuses on Judge Hanen’s previous writings about immigration and executive power. The 123 page decision is extremely thoughtful and comprehensive. Unlike the drivel from the District Court in Pennsylvania that reached out to decide an issue that was not before him, Judge Hanen has authored an authoritative and measured analysis of a really difficult legal issue.

What next? As I noted in this post in December, once the preliminary injunction issues, this case will rocket up to the 5th Circuit, and to SCOTUS by the end of this term. The Court will have to resolve this issue, and cannot let it linger on the certiorari docket till next term. As if this term couldn’t get any more intense!