D.C. Circuit Permits 16 States to Intervene in House of Representatives v. Price. What comes next?

August 1st, 2017

In May, sixteen states and the District of Columbia moved to intervene in the House of Representative’s lawsuit, which challenged the legality of the executive branch’s payment of cost-sharing reduction (CSR) subsidies. The suit began with the Obama administration in office, but–much to my continued surprise–has survived well into the Trump administration. The proposed intervenors argued that intervention was justified because “[t]he States and their residents cannot continue to rely on the Executive Branch to represent them in this appeal.”

Tonight, a three-judge panel of the D.C. Circuit (Millett, Pillard, and Wilkins) granted the motion to intervene. The court accepted their representation that the Justice Department would fail to adequately protect the intervenors’ interests:

Third, the States have raised sufficient doubt concerning the adequacy of the Department’s representation of their interests. Indeed, the Department nowhere argues in its intervention papers that it will adequately protect the States’ interests or even continue to prosecute the appeal.

The timing of this motion, which has been pending for some time, comes on the heels of last weeks failed vote for the BCRA, and Trump’s recent murmurings that he would cut off the CSR payments. Indeed, to adhere to the jurisprudence de jour, the panel recognized statements made by the President (ahem, “high-level officials”) about the CSR payments (though no citations to Twitter):

The States have filed within a reasonable time from when their doubts about adequate representation arose due to accumulating public statements by high-level officials both about a potential change in position and the Department’s joinder with the House in an effort to terminate the appeal. Nor have the House or the Department identified any relevant prejudice from granting intervention.

(Note that the D.C. Circuit did not grant the motion to intervene filed by two ACA beneficiaries, represented by Mayer Brown. I blogged about that effort here and here).

This motion to intervene is premised on the fact that the House of Representatives continues to prosecute the appeal, and the Trump Administration decides to dismiss the appeal. The far more likely scenario is that the Trump Administration simply cuts off the payments and the House, claiming victory, drops the case. There is no need for Trump to drop the appeal.

Nick Bagley makes a similar observation:

Now, the Trump administration could probably stop the payments, with or without the pending appeal. The administration could simply announce that, after a thorough review, the Justice Department has concluded that no appropriation exists to continue making the payments.

If the executive branch takes that route, the case of House of Representatives v. Price becomes moot. At that point, the states, along with insurance companies, and not to mention ACA beneficiaries, go right back to district court to seek a TRO to restore the payments. Thus, the decision to allow the intervention only has upside if Trump declines to appeal the judgment, but the House continues to prosecute the case.

Nick Bagley made one final point that I would like to focus on:

Although there’s a regulation on the books requiring payments to be made, the absence of an appropriation would likely prevent the administration from following through.

Here, he implicitly recognizes an argument I have developed in a different context: the President is under no obligation to adhere to an unconstitutional regulation. That is, if a regulation commands the President to spend money where there is no appropriation, the Constitution prevails, and he cannot spend the money. This argument applies equally to the illegal payment of subsidies to members of Congress and their staff.

Indeed, to do so would runs afoul of the President’s obligation to take care that the laws are faithfully executed. (Historically, the Take Care Clause has been invoked in this manner; not in the context of under-enforcement of the laws, such as with DAPA). Perhaps the most recent, and important application of this principle is Zivotofsky v. Kerry. Both Presidents Bush and Obama decided that Congress intruded into the executive’s power by requiring that the State Department stamp with “Israel” as the place of birth for Americans born in Jerusalem. President Bush signed the bill into law, and then simply disregarded the statute, finding it encroached on his Article II powers. President Obama did the same. In Zivotofsky v. Kerry, the Court sanctioned this practice. As Chief Justice Roberts noted in dissent, the “Court accepted a President’s direct defiance of an Act of Congress.” Jack Goldsmith aptly noted that OLC will likely read Zivotofsky as holding that “the President can ignore a foreign relations statute.”

Granted, here we are not dealing with foreign affairs concerning the recognition power; rather, this case concerns domestic law (health care) where Congress has broad authority. But–and this is the critical component–President Trump would not be disregarding a statute. He would be disregarding a regulation, promulgated by his predecessor.

As Chief Justice Roberts explained in Free Enterprise Fund v. PCAOB (2010), under separation of powers principles, Presidents cannot bind their successors:

Perhaps an individual President might find advantages in tying his own hands. But the separation of powers does not depend on the views of individual Presidents, see Freytag v. Commissioner, nor on whether “the encroached-upon branch approves the encroachment,” New York v. United States. The President can always choose to restrain himself in his dealings with subordinates. He cannot, however, choose to bind his successors by diminishing their powers, nor can he escape responsibility for his choices by pretending that they are not his own. (citations omitted).

To the extent that the APA requires the President to complete the notice-and-comment process, and in the process violate his obligations under the Take Care Clause, then the APA as applied is unconstitutional. In fact, by disregarding the unconstitutional regulation, he would be faithfully executing the statute–what he has sworn to do. This is the point I alluded to in National Review, and has been lost in recent arguments about the Take Care Clause. (I strongly doubt that Trump views any of these points along the lines I suggest, but from a legal perspective, it shouldn’t matter).

In any event, the composition of this panel is quite fitting. These are the three “nuclear” judges that Harry Reid pushed through, specifically for the purpose of saving Obamacare.

As I discuss in Chapter 14 of Unraveled:

Fittingly, it was Obamacare that finally triggered the nuclear option. On November 1, 2013, the D.C. Circuit invalidated the ACA’s contraceptive mandate. Writing the majority opinion was Judge Brown, who received a confirmation vote only after The Gang of 14’ s compromise. She concluded that the mandate “trammels the right of free exercise” of a for-profit grocery store owned by devout Catholics. 34 Reid still regretted that his fellow Democrats allowed Judge Brown and her colleagues onto the D.C. Circuit. “I don’t think they deserve to be on any court,” he lamented, “but we put them on there, and they have been terrible.” 35 According to The New York Times, Judge Brown’s decision “represented a turning point” for Senate Democrats. 36 At a closed-door meeting, Reid told his caucus, “These are the kinds of decisions we are going to have to live with,” unless Democrats could confirm more Obama appointees.

The Nevadan began “speaking individually with members of his caucus to gauge whether there [was] enough support to change filibuster rules.” 37 Democrats quickly lined up behind their leader. Senator Senator Barbara Boxer (D-CA) explained she was “very open to changing the rules for nominees.” 38 She said, “I was not before, because I felt we could work with them. But it’s gotten to an extreme situation where really qualified people can’t get an up-or-down vote.” Also changing her position was Senator Dianne Feinstein (D-CA), who regretted “the usual politics,” and the “unconscionable” strategy to block Obama’s nominees. A decade earlier, both Californians had filibustered Estrada, Brown, and the others. The Times reported that fifty-two of the fifty-five-member Democratic caucus supported Reid’s calculated political decision: “[ T] hey had to risk a backlash in the Senate to head off what they saw as a far greater long-term threat to their priorities in the form of a judiciary tilted to the right.” Even if the decision allowed a future Republican president to more easily confirm conservative judges, Democrats chose to act now to insulate President Obama’s agenda from judicial scrutiny.

On November 23, 2013, through an intricate parliamentary procedure, Majority Leader Reid proposed a rule change to eliminate the filibuster for all executive and judicial officers other than Supreme Court justices. 39 This rule change only needed fifty-one votes to pass. Fifty-two democrats supported the rule, while all forty-five republicans and three democrats voted nay. With this new rule in place, only a simple majority was now necessary for a judicial nominee to be confirmed. Millett, Pillard, and Wilkins – no longer blocked by a GOP filibuster – were promptly confirmed to the D.C. Circuit. As we will discuss in Chapter 22, the nuclear judges would play an important role in halting Halbig’s challenge to the IRS subsidies rule.

The court did not life the abeyance order so for now, at least, the case remains on hold.