CRS Report on Employer Mandate

October 26th, 2014

Si Lazarus and Elisabeth Stein link to a CRS report concerning the lawfulness of the Administration’s decision to twice delay the employer mandate. They concluded that there is “no legal basis” to a challenge to the delay. I think the report says a lot less. The first 13 pages of the report, titled “A Primer on the Reviewability of Agency Delay and Enforcement Discretion,” are background about the Court’s precedents concerning delays of agencies meeting statutory deadlines. The actual analysis of the ACA takes up three paragraphs.

First, it finds that the IRS’s 2013 notice would be considered a “guidance document.”

For example, on July 3, 2013, the Internal Revenue Service (IRS) issued Notice 2013-45 (Notice), stating that the IRS would not enforce the “employer mandate” of the ACA during 2014 in order to allow for “additional time for input from employers” on how the law can be effectively implemented.76 The Notice further encourages employers to “voluntarily comply with the information reporting provisions.”77 The IRS promulgated the Notice without undergoing notice and comment rulemaking procedures. However, the IRS does not appear to impose a new legal obligation on any parties, but, rather, the IRS seems to notify the public of its intent to not enforce these provisions against employers during 2014.78 A court would likely find that such a statement is a guidance document, because it merely notifies the public on how the agency plans to perform a discretionary function—enforcement discretion.79

All that tells is that the Court would not invalidate it because it failed to go through the notice and comment process. The gravamen of the complaint is not limited to the APA, but goes to the heart of the Take Care clause.

However, in other circumstances, an agency’s declaration of a delay or enforcement policy could require notice and comment procedures. In February 2014, the IRS announced final regulations implementing the employer mandate from the Affordable Care Act.80 In those regulations, the IRS provided for “transition relief” from the employer mandate tax for certain employers—that is, qualifying employers would not have to pay the tax.81 In order to be eligible for transition relief, employers must certify that they have met certain requirements established by the agency.82 Here, because the IRS is requiring employers to conduct a specific activity in order to be eligible for the transition relief—that is, provide certification—the transition relief is imposing a legal obligation on a party in order to qualify for a specific form of tax treatment. It would appear that an agency taking this approach to delaying a statutory provision would have to use informal rulemaking procedures because the agency would impose a legal obligation on a party, who wanted to benefit from the delay.83

Again, this only speaks to whether the notice and comment process was followed. This is a small aspect of the legal challenge to the delay.

Under the other form of agency delay—that is, where an agency fails to take a discrete action by a statutory deadline—no rulemaking is required. Often the agency has simply not been able to accomplish the required action within the time provided by Congress. In this type of situation, the agency has not taken any action; therefore, no rulemaking procedures are required. However, as mentioned above, an agency may be subject to a suit by a party seeking to compel the agency to take action.84

Same as before. The entire report focuses on the notice-and-comment process. Constitutional violations, if any, would trump the APA.

I should stress that I am not addressing the issue of standing. I am only talking about the merits. In fact the CRS alludes to this:

The dearth of case law relating to agency non-enforcement may be due to the difficulty of finding a plaintiff who has been sufficiently injured by agency inaction to obtain standing. See, e.g., CRS Legal Sidebar, Obama Administration Delays Implementation of ACA’s Employer Responsibility Requirements: A Brief Legal Overview.

While I’m here, another CRS report concerning the legality of the Individual Mandate delay is referenced in Footnote 5. Does anyone know where I can find it?

For example, although a provision in the ACA requiring that health plans meet certain minimum coverage requirements became effective in January 2014, the Center for Medicaid Services has announced that it will not enforce these requirements for certain plans for at least one year.5

5 For a discussion of this delay see, CRS Report WSLG724, Obama Administration’s “Fix” for Insurance Cancellations: A Legal Overview, by Jennifer A. Staman, Todd Garvey, and Daniel T. Shedd.