Blog

On Monday, Citizens for Responsibility and Ethics in Washington v. Donald J. Trump, will be filed in SDNY by Deepak Gupta, joined by Larry Tribe, Erwin Chemerinsky, Zephyr Teachout, Norm Eisen, and Richard Painter. The complaint asserts that Trump’s various business interests result in violations of the Foreign Emoluments Clause (as well as a half-hearted claim that his income also violates the Domestic Emoluments Clause). Further, it asks SDNY (Judge Rakoff perhaps?) to declare Trump’s conduct unlawful, and issue “[i]njunctive relief, enjoining Defendant from violating the Foreign Emoluments Clause, as construed by this Court.”

In terms of the merits, there is nothing new about this suit. We’ve debated at length about whether the emoluments clause applies to the President, and what precisely an emolument is. (As I’ve noted, the South Texas Law Review is organizing a symposium on this topic–we already have commitments from Andy Grewal, Seth Barrett Tillman, and Rob Natelson; I’ve invited several of the people involved with this suit, but each declined).

In this post, I’d like to focus on the standing argument, which is their first hurdle. In short, the complaint argues that because CREW is spending time on Trump’s emolument issue, they are not able to do things they would otherwise do. Therefore, they are injured under Article III, and can bring suit. The leading precedent they cite is Havens Realty Corp. v. Coleman.

A careful study of Havens Realty, a unanimous opinion from 1982 by Justice Brennan, demonstrates why the argument for standing is incredibly weak. Havens Realty involved a housing rights group (HOME) that sent “tester plaintiffs” to determine if Havens Realty was engaging in “racial steering” (that is, accepting white tenants but rejecting black tenants). The white tester were offered apartments; the black tester was told there were no vacancies. Apart from the testers, HOME asserted standing its own right:

It asserted that the steering practices of Havens had frustrated the organization’s counseling and referral services, with a consequent drain on resources. . . . “Plaintiff HOME has been frustrated by defendants’ racial steering practices in its efforts to assist equal access to housing through counseling and other referral services. Plaintiff HOME has had to devote significant resources to identify and counteract the defendant’s [sic ] racially discriminatory steering practices.”

HOME asserted damages under Section 804 of the Fair Housing Act (42 USC 3604(d)), which makes it unlawful for a firm to:

“represent to any person because of race, color, religion, sex, or national origin that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available.”

Section 812(a) (42 USC 3612(a)) provides for the cause of action:

When a charge is filed under section 3610 of this title, a complainant, a respondent, or an aggrieved person on whose behalf the complaint was filed, may elect to have the claims asserted in that charge decided in a civil action under subsection (o) of this section in lieu of a hearing under subsection (b) of this section. The election must be made not later than 20 days after the receipt by the electing person of service under section 3610(h) of this title or, in the case of the Secretary, not later than 20 days after such service. The person making such election shall give notice of doing so to the Secretary and to all other complainants and respondents to whom the charge relates.

With this provision, the Court, observed:

Congress has thus conferred on all “persons” [JB: including organizations, which are corporations] a legal right to truthful information about available housing.

The Court’s analysis focused extensively on “congressional intention” underly the FHA to permit suits:

This congressional intention cannot be overlooked in determining whether testers have standing to sue. As we have previously recognized, “[t]he actual or threatened injury required by Art. III may exist solely by virtue of ‘statutes creating legal rights, the invasion of which creates standing….’ ” Warth v. Seldin, supra, at 500, 95 S.Ct., at 2205, quoting Linda R.S. v. Richard D., 410 U.S. 614, 617, n. 3, 93 S.Ct. 1146, 1148, n. 3, 35 L.Ed.2d 536 (1973). Accord, Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 1364, 31 L.Ed.2d 636 (1972); Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 212, 93 S.Ct. 364, 368, 34 L.Ed.2d 415 (1972) (WHITE, J., concurring). Section 804(d), which, in terms, establishes an enforceable right to truthful information concerning the availability of housing, is such an enactment.

However, the facts of the case were split. With respect to the black tester (Coleman), there was standing because he was actually injured (given false information):

In the instant case, respondent Coleman—the black tester—alleged injury to her statutorily created right to truthful housing information. As part of the complaint, she averred that petitioners told her on four different occasions that apartments were not available in the Henrico County complexes while informing white testers that apartments were available. If the facts are as alleged, then respondent has suffered “specific injury” from the challenged acts of petitioners, see App. 16, ¶ 13, and the Art. III requirement of injury in fact is satisfied.

For the white tester (Willis), there was no standing, because he was never injured (he was given true information):

Respondent Willis’ situation is different. He made no allegation that petitioners misrepresented to him that apartments *375 were unavailable in the two apartment complexes. To the contrary, Willis alleged that on each occasion that he inquired he was informed that apartments were available. As such, Willis has alleged no injury to his statutory right to accurate information concerning the availability of housing. We thus discern no support for the Court of Appeals’ holding that Willis has standing to sue in his capacity as a tester.

With respect to HOME’s standing analysis, it is important to stress what the Court did, and did not resolve. First, it did not hold that the organization has standing in its own right to seek injunctive relief:

HOME brought suit against petitioners both as a representative of its members and on its own behalf. In its representative capacity, HOME sought only injunctive relief. See App. 17, ¶ 16; id., at 18–20, ¶ 18. Under the terms of the letter settlement reached between petitioners and respondents, however, HOME has agreed to abandon its request for injunctive relief in the event the District Court ultimately approves the settlement.

The Court did address whether the organization has standing in its own right to seek damages:

While we therefore will not decide the question involving HOME’s representative standing, we do proceed to decide the question whether HOME has standing in its own right; the organization continues to press a right to claim damages in that latter capacity. . . . If, as broadly alleged, petitioners’ steering practices have perceptibly impaired HOME’s ability to provide counseling and referral services for low-and moderate-income homeseekers, there can be no question that the organization has suffered injury in fact. Such concrete and demonstrable injury to the organization’s activities—with the consequent drain on the organization’s resources—constitutes far more than simply a setback to the organization’s abstract social interests, see Sierra Club v. Morton, 405 U.S., at 739, 92 S.Ct., at 1368.

This is the crux of CREW’s arguments: because of the “drain on the organization’s resources” it has standing to challenge President Trump’s business interests. Their argument fails for at least three reasons.

First, Havens Realty only concerned standing for damages, not injunctive relief. CREW seeks only injunctive relief, and no damages (other than attorney’s fees). The Sixth Circuit noted this distinction in Fair Elections Ohio v. Husted:

…the plaintiff organization sought damages, not an injunction, id. at 378, 102 S.Ct. 1114; damages are a classic basis for standing. And as the Supreme Court later held in City of Los Angeles v. Lyons, plaintiffs who have standing to bring a damages claim do not necessarily have standing to bring a claim for injunctive relief. 461 U.S. 95, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983).

Fair Elections Ohio v. Husted, 770 F.3d 456, 460 (6th Cir. 2014)

Havens Realty does not provide the rule of decision for a suit concerning injunctive relief.

Second, the Court’s analysis was very closely tied to the specific statutory scheme erected by Congress under the FHA. Again, Husted offers a relevant analysis.

the injury to the plaintiff organization in Havens was a distinct and palpable injury to a broad legal right intrinsic to the organization’s activities. In Havens, the right under the Fair Housing Act was “an enforceable right [of any person] to truthful information concerning the availability of housing,” 455 U.S. at 373, 102 S.Ct. 1114—a right that cuts to the core of an organization that “provide[d] counseling and referral services for low-and moderate-income homeseekers,” id. at 379, 102 S.Ct. 1114. The misinformation provided by the Havens defendants, i.e. a lie told to black renters, including a member of the organization, that no rental units were available, directly interfered with the organization’s ability to provide truthful counseling and referral services. The present case does not involve false information.

True, CREW may have an interest in ethics, but they don’t have a similar statutory hook to go after the President’s emoluments clause violations, as HOME did with respect to the FHS.

Third, I frankly don’t understand how the three-decade old Havens can be reconciled with Spokeo v. Robbins (2016) Clapper v. Amnesty International (2012).

In Clapper, the Court held that asserting that there was an “objectively reasonable likelihood” of some future injury, was not sufficient to create Article III standing. I searched all of the briefs in Clapper, and found only one citation to Havens in the brief by the NYC Bar’s Committee on Civil Rights:

Contrary to the government’s contention, “[s]tanding is not defeated merely because the plaintiff has in some sense contributed to his own *18 injury.” 13A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3531.5 (3d ed. 2008). Such is foreclosed by several of this Court’s precedents. See, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 184-85 (2000) (holding that plaintiffs’ decision to curtail their recreational use of a river polluted by defendant was “entirely reasonable” and thus constituted an injury in fact); Keene, 481 U.S. at 475 (finding that plaintiffs “need to take … affirmative steps to avoid the risk of harm to his reputation constitutes a cognizable injury”); Havens Realty Corp. v. Coleman, 455 U.S. 363, 379 (1982) (finding that plaintiff’s decision to devote significant resources to counteract defendant’s racially discriminatory steering practices constituted a “concrete and demonstrable injury”). Although these cases focused on whether the plaintiffs had established injury-in-fact, they nonetheless held that a plaintiff who reasonably changes his or her behavior to avoid the risk of harm caused by the defendant’s challenged conduct has standing. See Laidlaw, 528 U.S. at 184-85.

If Amnesty International could assert an injury because it diverted resources from Activity A to Activity B, as the amicus brief notes, it would change its “behavior to avoid the risk of harm caused by the defendant’s challenged conduct,” and thus have standing. The Court, no doubt, rejected this argument. Neither the majority nor the dissent cited it.

The second relevant case is Spokeo v. Robins. Robins asserted that Spokeo violated the Fair Credit Reporting Act by posting false information about him. In a somewhat unsatisfying opinion to procedure nerds, Justice Alito held that even if the injury was particularized, it was not concrete.

Concreteness is quite different from particularization and requires an injury to be “de facto,” that is, to actually exist.

Whatever that means, the majority opinion does not cite Havens, nor does it discuss whether Robins decision to search Spokeo, as opposed to doing something else, was sufficient to generate an opinion.

Justice Ginsburg’s dissent does cite Havens in two spots. First, she discusses it among other cases, in the context of Congress creating new private causes of action.

When Congress creates new private causes of action to vindicate private or public rights, these Article III principles circumscribe federal courts’ power to adjudicate a suit alleging the violation of those new legal rights. Congress can create new private rights and authorize private plaintiffs to sue based simply on the violation of those private rights. See Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). A plaintiff seeking to vindicate a statutorily created private right need not allege actual harm beyond the invasion of that private right. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 373–374, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) (recognizing standing for a violation of the Fair Housing Act).

Second, Ginsburg notes that FHA and the FCRA are on a similar footing, in light of Congress’s intent to prevent dissemination of inaccurate information:

The Court acknowledges that Congress has the authority to confer rights and delineate claims for relief where none existed before . . . ; Havens Realty Corp. v. Coleman, 455 U.S. 363, 373, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982) (identifying, as Article III injury, violation of plaintiff’s right, secured by the Fair Housing Act, to “truthful information concerning the availability of housing”)^3

^3 Just as the right to truthful information at stake in Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982), was closely tied to the Fair Housing Act’s goal of eradicating racial discrimination in housing, so the right here at stake is closely tied to the FCRA’s goal of protecting consumers against dissemination of inaccurate credit information about them.

RBG did not assert that Robbins decision to search Spokeo, and not Google, was sufficient to assert an injury. Diverting resources was not enough. And her dissent was closely pegged to Congress creating a private cause of action for damages–conditions that do not apply here.

In light of Spokeo and Clapper, Havens is on a shaky footing. But even if it is good law, it is unhelpful to the Emoluments Clause suit, which does not rely on a congressional scheme, and does not seek damages. This injury is self-inflicted, and does not find support in the Court’s caselaw.

Putting aside the question of standing, a serious justiciability hurdle is whether this is a political question. (No court has ever addressed this Clause). The foreign emoluments clause specifically references Congress:

No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.

Under Baker v. Carr (if those factors even matter any more), there is a “textually demonstrable constitutional commitment of the issue to a coordinate political department.”

It is apparent that several formulations which vary slightly according to the settings in which the questions arise may describe a political question, although each has one or more elements which identify it as essentially a function of the separation of powers. Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.

There is every reason for the courts to stay away from this issue.

Frankly, I’m surprised CREW fired early with this suit, while (reports NYT) the ACLU searches for a hotel or bed-and-breakfast that would have a stronger case for standing. Maybe the plan is to file one suit in the 2nd Circuit, another in the D.C. Circuit, and hope to bring one up to the Supreme Court as soon as possible.

I chuckled when I read this lede from the NYT:

President Trump plans to take executive action on a nearly daily basis for a month to unravel his predecessor’s legacy and begin enacting his own agenda, his aides say, part of an extended exercise of presidential power to quickly make good on his campaign promises.

The challenge, it seems, is that unlike his predecessors, the Trump Administration does not have a play-by-play of how to use executive action to undo the Obama legacy.

But in a reflection of the improvisational style that helped fuel his rise, he has made few, if any, firm decisions about which orders he wants to make, or in which order. That is a striking break from past presidents, who have entered office with detailed plans for rolling out a series of executive actions that set a tone for their presidencies and send a clear message about their agendas.

It was plain that Mr. Trump had devised no such strategy by his first day in office, as advisers expressed doubt until the last moments about whether he would issue any directives on Friday. “It’s going to be a game-day decision,” Sean Spicer, the White House press secretary, told reporters that afternoon.

Then, around 7 p.m., reporters were suddenly summoned to the Oval Office. After sprinting from the briefing room, they watched Mr. Trump sign a directive to federal agencies to begin scaling back parts of the Affordable Care Act.

“There are a number that are being looked at, but it’s just a question of which ones he feels like doing, and when,” Mr. Spicer had said of executive orders earlier on Friday. In recent days, he had said that Mr. Trump’s top aides were still deciding on the “sequencing” of the unilateral actions.

A similar uncertainty pertains to the President’s decisions concerning DACA and DAPA.

Advocates for undocumented workers are anxiously waiting to see what Mr. Trump will do.

If he moves aggressively, he could immediately overturn Deferred Action for Childhood Arrivals, or DACA — the program Mr. Obama created to protect young immigrants who were brought illegally to the United States as children, giving them legal status and access to work permits. Ending that program would put as many as 800,000 of them at risk of being removed from their families and sent to the countries they had left as children.

The White House could instead unwind the program slowly, giving the young people, often called Dreamers, more time before their immigration protections and work permits expire. Senator Richard J. Durbin, Democrat of Illinois, said on Friday that in a brief conversation with the new president, Mr. Trump had given him assurances about the program.

The president, Mr. Durbin said, told him that “we don’t want to hurt those kids; we’re going to do something.”

“Thank goodness he said that,” the senator added.

Since my initial post about President Trump’s executive order on Obamacare, my reaction has been a mix of irony and schadenfreude. Irony, in that all of the precedents set by Secretary Sebelius to salvage the ACA will allow Secretary Price to unravel the ACA. Schadenfreude, in that the cadre of Obamacare acolytes who steadfastly defended Secretary Sebelius’s unfettered discretion, will now be forced to steadfastly attack Secretary Price’s unfettered discretion. (Note to reporters: if your expert have suddenly reversed their position on the scope of the Secretary’s powers after January 20, you should stop calling them).

Yesterday, I spoke at some length with Politico reporter Dan Diamond, who characterized my sentiments quite well in this piece:

Conservatives who railed against Barack Obama’s vast powers to build up the Affordable Care Act declared vindication Saturday with President Donald Trump’s executive order to tear it apart.

“For me, it’s a mix of irony and schadenfreude,” says Josh Blackman, a law professor who’s written two books that criticized the Obama administration’s implementation of the law. “I’ve warned for years that, with a new president in the White House, the exact same powers could be used for different purposes. That’s what we’re seeing now, to a T.”

The core purpose of the executive order was to shift the prioritization of the administration. President Obama’s priority was to encourage as many people as possible to enroll on the exchanges. (Many of his actions, which were designed for short-term enrollment gains, had the long-term effect of sabotaging the marketplace.). Now, the priority has shifted to minimize the burdens imposed by Obamacare. As I’ve been warning for years, what comes around goes around.

Nick Bagley, whom I’ve had the good fortunate to interact with throughout this Obamacare fight, agrees that precedents set by the Obama administration can now serve as sources of authority for the Trump Administration. (Kudos to Bagley for maintaining a consistent position on the scope of the Secretary’s powers–he is one of the few).

That could be devastating to Obamacare because the administration relied on its executive authority to set up the law.

“Its implementation depended critically — and depends critically — on rules and guidance that HHS and other agencies have put out,” says Nicholas Bagley, a University of Michigan law professor who supports the ACA. “There are literally thousands of decisions that had to be made” by the administration — and “any decision that the Obama administration had the discretion to make, in principle, the Trump administration can revisit.”

For example, the Obama administration twice delayed the employer mandate. The first go-round, the rationale was that the IRS was not ready to have the forms to process the employer mandate, so they needed more time. At the time, I called bullshit, but whatever, government moves slow. But a few months later, the mandate was delayed and modified, such that certain smaller employers were subject to a different mandate. None of that was in the statute. With this history in place, the Trump Administration can issue even more delays, such that it may never go fully into effect. Bagley largely agrees:

The vast, and at times, legally questionable decisions undertaken by the Obama administration may also set precedent for the Trump administration to do the exact same thing. Both Blackman and Bagley agree the administration’s 2013 decision to delay Obamacare’s employer mandate was unlawful; House Republicans even sued, although their challenge was thrown out in court. Trump could now cite that delay as precedent for declining to enforce provisions that he dislikes.

A second precedent was the so-called “hardship exemptions.” Secretary Sebelius deemed it a hardship if anyone had difficulty affording insurance under the ACA, permitting a waiver of the individual mandate. As Ezra Klein famously put it, “Obamacare itself is the hardship”. (This proposal was first sketched out by Austin Frakt and Nick Bagley–see Update 2). Trump’s order follows a similar pattern.

A third relevant precedent was the so-called “administrative fix.” As the ACA was designed, states were asked to modify their insurance markets to prohibit the sale of such policies. If a state declined to regulate the marketplace (they could not be required to), the Secretary of HHS “shall” do it in their place. Of course, under the “administrative fix,” Secretary Sebelius told states that if they declined to enforce the mandates, she would do nothing. Technically, she said she would never make the determination that states were noncompliant, thus her duty to backfill was never triggered. This argument was specious (see this letter from WV AG Morrisey) but it now allows Secretary Price to do the same–he could simply never determine if states are complying, thus the mandates will not be enforced in the state.

One curious note. As I noted on January 12, the Supreme Court called for a response to West Virginia’s petition for a writ of cetiorari. Their suit challenges the legality of the administrative fix. D.D.C. and CADC dumped the case on standing grounds, but all issues are squarely teed up for the Court. The Trump DOJ will have to file a reply  by February 10 (though that date will likely be pushed forward).

One caveat–the Politico article conflates the “hardship exemptions” and the “administrative fix” but gets the sentiments correct. (Bagley thinks the “administrative fix” is unlawful, but helped propose the “hardship exemption” approach). Whatever Obama did to increase enrollment now sets the stage for Trump to do the opposite to relieve burdens.

The Trump administration could also issue a slew of waivers to exempt Americans from the ACA’s individual mandate – although the Obama administration already broadened those exemptions in 2013, after the political outcry from Americans whose plans were canceled because they didn’t meet Obamacare criteria.

The “‘like it, keep it’ fiasco” set a precedent for Trump too, says Bagley.

At the time, the administration said it would give hardship waivers to Americans who had difficulties paying for coverage under the ACA. But “if you define the hardship as that, then every American is facing higher premiums because of the ACA, one way or another,” says Blackman. “Obamacare is itself the hardship.”

As I explain to my students every semester, most decisions about the scope of the executive’s powers are made not by the courts, but by the executive branch. Past practice, though not dispositive of the legal question, can serve as a “gloss” on the President’s lawful authority. Courts, by and large, respect long-standing precedents. Noel Canning, perhaps more than any other decision, articulates this view. Alas, a few blog posts and letters from Secretary Sebelius hardly satisfy as the sort of long-standing precedent that is entitled to weight.

I would relish in a judicial decision, bolstered by fair-weathered separation of powers fans, that cabin the executives unfettered discretion.

Yesterday, the Office of Legal Counsel published the first new opinion of the Trump Administration, titled Application of the Anti-Nepotism Statute to a Presidential Appointment in the White House Office. It is signed by career lawyer DANIEL L. KOFFSKY, Deputy Assistant Attorney General Office of Legal Counsel. Here is the introduction:

You have asked whether section 3110 of title 5, U.S. Code, which forbids a public official from appointing a relative “to a civilian position in the agency . . . over which [the official] exercises jurisdiction or control,” bars the President from appointing his son-in-law to a position in the White House Office, where the President’s immediate personal staff of advisors serve. We conclude that section 3110 does not bar this appointment because the President’s special hiring authority in 3 U.S.C. § 105(a) exempts positions in the White House Office from section 3110.

A decision of the D.C. Circuit, Haddon v. Walters, 43 F.3d 1488 (D.C. Cir. 1995) (per curiam), lays out a different, but overlapping, route to the same result. According to the reasoning of Haddon, section 3110 does not reach an appointment in the White House Office because section 3110 covers only appointments in an “agency,” which the statute defines to include “Executive agenc[ies],” and the White House Office is not an “Executive agency” within the definition generally applicable to title 5. Although our analysis does not track every element of the D.C. Circuit’s reasoning about the meaning of “Executive agency,” we believe that Haddon arrived at the correct outcome and that our conclusion here—that, because of the President’s special hiring authority for the White House Office, section 3110 does not forbid the proposed appointment—squares with both the holding and a central part of the analysis in that case.

Haddon was a per curiam opinion by Buckley, Ginsburg, and Sentelle. What a panel!

Future OLC Opinions I expect: (1) rationale for firing Richard Cordray, and (2) rationale for halting CSR payments. I would like, but do not expect, an opinion withdrawing the DAPA OLC opinion. It is far easier to simply withdraw the policy, but leave the OLC opinion in place–it may come in handy in the future.

H/T Josh Gerstein

 

Since it was enacted, President Obama has used all manners of executive power to salvage the Affordable Care Act–at least in the short term. (Many of his exemptions and waivers to the waivers inflicted long-term structural damage to the marketplaces). Now, in his first day of office, President Trump has embarked on using the same species of power to undo Obamacare. Hours after taking the oath of office, President Trump signed an executive order to “minimiz[e] the economic burden of” the ACA.

Signing documents to allow Mattis and Kelly to be sworn into Cabinet and an executive order on #Obamacare. https://t.co/zg3WP9w8xC pic.twitter.com/OMOGLTkCDA

— President Trump (@POTUS) January 21, 2017

Section 1 of the Order states that “it is the policy of my Administration to seek the prompt repeal” of the ACA. There is no doubt or walking back this line. Further,

“it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.

How will this be accomplished? Section 2 states that the Secretary of HHS, and other officials,

“shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

There is, of course one proviso: HHS can only act here “to the maximum permitted by law.” What is that extent? Under the precedents of the Obama administration, there are no meaningful bounds. Secretary Sebelius deemed it a hardship if anyone had difficulty affording insurance under the ACA, permitting a waiver of the individual mandate. (As Ezra Klein famously put it, “Obamacare itself is the hardship”). Trump’s order follows a similar pattern. If the Obamacare “tax” (thank you John Roberts) imposes a “burden” on individuals, the Secretary now has the authority to defer the mandate.

This discretion is not limited to states. Secretary Sebelius also permitted states to suspend enforcement of “minimum essential coverage,” and allow the sale of non-compliant policies, citing the unfairness of people whose plans would otherwise be cancelled. Thus, if “minimum essential coverage” impose a “fiscal burden on any state,” the Secretary can now suspend it. Using all of the precedents developed by the Obama administration, Trump can now take systematic steps to unravel Obamacare. (Note that I’ve written at length that all of these actions were illegal, and will be illegal).

Perhaps the most important provision is Section 5.

“To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rule-making, the heads of agencies shall comply with the Administrative Procedure Act and other applicable statues in considering or promulgating such regulatory revisions.”

The order, by itself, takes no action. It merely signals to his administration what his priorities are. But the impact is unmistakeable. The Secretaries of the various departments will take the direction, issue memorandums, rescind memorandums, and rescind rules.

At the moment, the “Executive Order” page of WhiteHouse.gov is blank. Expect this page to be filled up as the days go by.

Update: On cue, ardent defenders of President Obama’s executive actions have now discovered the separation of powers:

But this executive action on its own does not unravel the mandate on its own, or any other part of Obamacare for that matter. Instead, it sets up a long, drawn-out process to change the law’s rules — a unwinding process that takes time. And there are still major limits to how much Trump can do before Congress acts.

“Trump is going to have to comply with law, and that doesn’t allow him to repeal the Affordable Care Act unilaterally,” health law expert Tim Jost, a law professor at Washington and Lee College, says.

As the above post notes, the precedents of the administrative fix, and the hardship exemptions, provides a broad basis to suspend “minimum essential coverage” requirements as well as the individual mandate.

Update 2: Nick Bagley reads the EO in much the same way with respect to killing the individual mandate–a step that would be illegal, but entirely consistent with Secretary Sebelius’s decision.

What troubles me most is the instruction to “delay the implementation of” any “tax” on individuals. Back in 2013, the Obama administration delayed the implementation of both the employer mandate and some of the ACA’s insurance rules. The implementation delays were unlawful, as I argued at the time. I warned, too, that they were shortsighted:

A future administration that is less sympathetic to the ACA could invoke the delays as precedent for declining to enforce other provisions that it dislikes, including provisions that are essential to the proper functioning of the law. The delays could therefore undermine the very statute they were meant to protect—and perhaps imperil the ACA’s effort to extend coverage to tens of millions of people.

Delaying the individual mandate is precisely what I feared most. (The E.O.’s instruction to consider delaying implementation of taxes on “makers of medical devices, products, or medications” could also lead to the suspension of the medical device tax and the tax on the pharmaceutical industry. That’d be a sweetheart gift for industry.)

Update 3: Seth Chandler reaches much the same conclusion:

1. “Delay” enforcement of the individual and employer mandates. President Obama, after all, delayed enforcement of the employer mandate for a year for some large employers and delayed enforcement for two years for others. It was, the President asserted, too burdensome to comply with. President Trump might equally assert that, given the poor quality and high prices of ACA policies in many jurisdictions, it is too burdensome to comply with the individual mandate today. And the employer mandate, with its exacting employee-counting rules, remains somewhat burdensome. Moreover, even if there are differences in kind and degree between President Obama’s actions and those taken pursuant to the Trump Executive Order, who would have standing to challenge any lack of enforcement?  It’s all part of the “discretion” on which the Obama administration rested many actions under the ACA and other statutes. And it will take some work for Obama supporters to object to actions by the Trump administration to engage in these “delays” since President Obama did it himself.

2. Expand “hardship exemptions” from the individual mandate so that basically nobody has to pay what many conservatives still regard as an unconstitutional tax. President Obama, after all, without notice and comment created hardship exemptions that had, quite arguably, little to do with actual hardship and a lot to do with politics: the exemption of persons who can afford insurance but who live in a state that dared not to expand Medicaid would be my Exhibit A on this point. And, again, even if granting such a hardship were unlawful, at least without notice and comment rule making, who is going to have standing to challenge the “enforcement priority?” Either delay of the individual mandate or expansion of the hardship exemption would threaten continued participation of insurers selling policies on the individual market.

3. Extend the option of the states to permit insurers to sell insurance policies that do not comply with ACA requirements regarding matters such as “benefit packages” (maternity, contraceptives, pre-existing condition limits, etc). Such sales would make Exchange policies less attractive to many men, younger persons or others who want policies that are cheaper (and often provide less coverage) then those sold on the Exchanges. How could President Trump do this lawfully or without sluggish notice and comment rule making? The same way President Obama did in November of 2013 — by executive order and a regulatory guidance! Remember the firestorm of protest when it was discovered that President Obama had issued the “lie of the year” when he said that if you liked your healthcare plan you could keep your healthcare plan. Period. The “Administrative Fix” explicitly permitted states to let their insurers violate the ACA, an invitation that was accepted by some jurisdictions and rejected by others. Oh, and think that surely a court would overturn such a subversion of the law by decree? Ask West Virginia. Its  case objecting to this apparent abuse of separation of powers was tossed out by the United States Court of Appeals for the District of Columbia. Maybe the Supreme Court will ultimately overturn the Court of Appeals, but, even if so, it will have taken West Virginia more than three years to restore the rule of law.

Tim Jost, on the other hand, now asserts there are limits on what can be a “hardship”:

New categories of hardship exemptions to the individual responsibility requirement may be created, but they will have to qualify as hardships. …

A number of commenters have noted that the Order seems to instruct HHS to liberally grant waivers from the individual responsibility requirement of the ACA. The ACA gives HHS discretion in granting “hardship” waivers and current regulations  authorize HHS to do this through guidance. The Obama administration authorized hardship waivers in a number of circumstances, and one can imagine Trump’s HHS granting hardship exemptions even more broadly, perhaps even through guidance.

But surely the term “hardship” is not meaningless—simply being required to purchase health insurance is not in itself a hardship, because that is what the individual responsibility law requires. Were the Trump administration to effectively repeal the mandate, it would certainly be sued.  Individuals with preexisting conditions left in a market without healthy enrollees would have a strong argument for standing. Also, as the Congressional Budget Office has acknowledged, repealing the individual responsibility requirement could have a devastating effect on the individual insurance market if it is not replaced by another means of encouraging healthy people to enroll. Would the Trump administration want to risk destroying the individual market through executive action? We will see.

Oh but under Secretary Sebelius’s standards, “hardship” is meaningless. From Unraveled:

The legal basis for the hardship fix was sketched out by Professors Nicholas Bagley and Austin Frakt two months earlier, in an article aptly titled “Saving Obamacare without Congress.” 113 First, the professors explained that the law allows for a “hardship exemption” for anyone who has “suffered “suffered a hardship with respect to the capability to obtain coverage under a qualified health plan.” Second, they wrote, Secretary Sebelius can “grant a certification” for particular individuals attesting that “there is no affordable qualified health plan available through the Exchange.” As a result, if these two provisions are put together, the scholars explained, it could be a “hardship” if there was “no affordable qualified health plan available through the Exchange.”

But there is an ironic quality to this reasoning. Congress created several categories of people who would be exempted from the individual mandate’s penalty: “individuals who cannot afford coverage,” “taxpayers with incomes below filing threshold,” “member[ s] of Indian tribes,” and anyone who “suffered a hardship with respect to the capability to obtain coverage under a qualified plan.” 114 Congress set a strict threshold for exemptions from the penalty due to inability to pay: those for whom the annual cost of coverage exceeds 8 percent of household income. 115 These are individuals with extremely low incomes, who would likely qualify for Medicaid.

HHS’s blanket policy of exempting anyone whose insurance was “more expensive” than before, irrespective of annual income, is impossible to reconcile with the congressional scheme. This hardship “exemption” swallows the rule. Ezra Klein aptly summarized the change: “In other words, Obamacare itself is the hardship.” 116 University of Houston Law professor Seth Chandler joked, “Surely, however, the existence of the ACA itself cannot be the human-caused event creating the hardship.” 117 Through this administrative-law shell game, the executive swept away Congress’s exemption design. The Wall Street Journal editorialized, “A tornado destroys the neighborhood or ObamaCare blows up the individual insurance market, what’s the difference?” 118

Those who defended this extremely broad reading of “hardship” in 2013 will now have to reconcile a similarly broad reading of “hardship” in 2017.

Update 4: Here is the full text of the executive order:

MINIMIZING THE ECONOMIC BURDEN OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT PENDING REPEAL

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law 111-148), as amended (the “Act”). In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.

Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.

Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other applicable statutes in considering or promulgating such regulatory revisions.

Sec. 6. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,

January 20, 2017.