If you're reading this, my bet is you already know about Fifth Circuit's recent divided opinion in Texas v. United States. The question was whether the ACA's individual mandate (26 U.S.C. 5000A(a)) remained constitutional in the wake of the Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, § 11081, 131 Stat. 2054, 2092 (“TCJA”). Judge Elrod's majority opinion summarizes the panel's decision:
Judge Engelhardt joined the majority opinion, and Judge King dissented. There's no shortage of commentary on this case, so I'm not going to attempt an exhaustive analysis here. Instead, I offer my own thoughts only to the extent that I believe I have something to add to the conversation.
I'm skeptical of the majority's standing analysis for some of the same reasons Judge King raises in her dissent (especially her discussion of traceability) as well as those Professor Stephen Sachs describes here. One point that, as far as I'm aware, has escaped attention, however, is the majority's heavy reliance on Judge Smith's recent opinion (which Judge Elrod joined), in Texas v. EEOC to support its analysis of the standing question (if you need a refresher on Texas v. EEOC, see my discussion in this earlier post). As I explain next, I'm not convinced that Texas v. EEOC supports the plaintiffs' standing in Texas v. United States.
In Texas v. EEOC, Texas sued the federal actors (EEOC and the Attorney General) responsible for the action that it claimed was unlawful (EEOC's promulgation of an agency guidance memo). Here, by contrast, Texas and the individual plaintiffs sued a bevy of executive branch entities that had nothing to do with the 2010 Congress's passage of the mandate or the 2017 Congress's passage of the TCJA (the amendment that zeroed out of the ACA's penalty provision). I would have thought that would be fatal to plaintiffs' ability to demonstrate causation and redressability. Plaintiffs claim that the mandate is now unlawful because, with the penalty zeroed out, it is nothing but a standalone command requiring them to buy insurance they don't want. Even assuming that's right, though, isn't the 2017 Congress--and not the agencies and executive branch officials plaintiffs sued--to blame for that injury? And how is an injunction against these defendants supposed to redress such an injury?
If the injury is living in a world where a federal statute commands you to buy insurance, then it seems redressing that injury would require erasing that command from the U.S. Code or at least an order declaring it invalid/unconstitutional. But what does either remedy have to do with the agencies and executive-branch defendants plaintiffs sued? How do you write an injunction compelling them to make either of those things happen?
These concerns make me wonder whether the defendants in this case are passive observers neither responsible for the alleged unlawfulness that plaintiffs claim caused their injury nor capable of redressing it.
The majority and dissenting opinions in Texas v. United States–like every commentator on the case before and after the opinion issued that I'm aware of--agreed that NFIB v. Sebelius dictates the outcome in this case. The only question, according to the competing sides in this debate, is which result NFIB requires. As I'll explain next, it looks like I'm the only person in the world who thinks NFIB doesn't control here.
The argument that NFIB dooms the post-TCJA mandate goes something like this:
- NFIB held that the mandate was not a constitutional exercise of Congress's power to regulate interstate commerce;
- NFIB held that it was fairly possible to interpret the mandate and the shared responsibility provision together as offering people the option of buying insurance or paying a tax and thus as a permissible exercise of Congress's taxing power;
- That saving construction was possible only because, among other reasons, the shared responsibility provision generated revenue for the U.S. Treasury;
- Now that Congress has zeroed out the shared responsibility provision, however, it no longer generates revenue, making it impossible to justify the mandate as a permissible exercise of Congress's taxing power;
- Therefore, the mandate is no longer constitutional.
The argument that NFIB requires the opposite result is even simpler:
- The Supreme Court already upheld the mandate as a permissible exercise of Congress's taxing power in NFIB;
- The TCJA didn't render the mandate any less optional by zeroing out the penalty;
- Therefore, NFIB's authoritative construction of the mandate as a permissible exercise of Congress's taxing power remains valid as ever.
I find neither line of reasoning convincing. Let's start with the argument that plaintiffs' challenge to the TCJA is a non-starter because NFIB upheld the mandate as a permissible exercise of the 2010 Congress's taxing power. Thing is, NFIB simply doesn't answer the question presented here: whether Congress has authority under the taxing power to regulate individual behavior through a standalone command that does not and cannot generate revenue for the U.S. Treasury. The answer to that question may be obvious, and NFIB might provide valuable insight into how the Supreme Court would likely answer it, but I'm not convinced that NFIB resolves it. Seems to me that most people who take this view actually just think the plaintiffs' argument is absurd and/or frivolous. Isn't that a separate issue, though?
I also don't think NFIB required the Fifth Circuit to hold that the mandate is no longer constitutional. It is, of course, true that five Justices in NFIB agreed that the mandate wasn't a permissible exercise of the 2010 Congress's commerce power because instead of "regulat[ing] existing commercial activity," section 5000A(a) "compels individuals to become active in commerce by purchasing a product." Those who support the majority opinion's view assume that by zeroing out the penalty the 2017 Congress asserted the very same power to "compel individuals to become active in commerce." Isn't it at least possible to avoid that conclusion, though?
NFIB emphasized that the 2010 Congress addressed the mandate to a set of people who had chosen not to purchase health insurance and commanded them to become active in commerce. The same cannot be said of the 2017 Congress. By the time the 2017 Congress enacted the TCJA, lots of people (including the individual plaintiffs) had already purchased insurance. Even assuming that the TCJA renders the mandate a standalone command to purchase insurance, it still couldn't be construed as "compel[ling]" any of those people--i.e. those who, by the time the TCJA went into effect, had already purchased insurance--"to become active in commerce." Given the court's duty to resort to "every reasonable construction ... to save a statute from unconstitutionality," why not construe the TCJA as a permissible exercise of the 2017 Congress's commerce power but only to the extent that it ordered people who had already bought insurance to maintain coverage?
And even if my hare-brained commerce-power argument fails, I'm also not convinced that the 2017 Congress necessarily exceeded its taxing power. NFIB holds that a mandate plus a penalty may be construed as a tax as long as the penalty (1) is paid into the Treasury and (2) isn't so large that it becomes punitive. Even assuming the penalty cannot possibly be construed as a tax anymore now that it generates no revenue, isn't it still possible that Congress had authority under the taxing power to zero out the penalty?
I'm no expert on the taxing power, but surely it permits Congress to do more than just levy taxes. I would assume, for instance, that Congress also has authority to reduce taxes, meaning it would have been perfectly permissible for the 2017 Congress to reduce the penalty to $.01. Is it really so clear that Congress is utterly powerless with respect to that final penny?
Better yet, consider this slightly different question: Gun to your head, are you telling me that Chief Justice Roberts doesn't have five votes for the proposition that--one way or the other--Congress's taxing power reaches that last penny, too?
In my view, resolving this case on the merits would require answering questions that, to my knowledge, nobody has addressed yet. And because (1) I think this case should have been decided and on standing and (2) I'm not prepared to answer the deeper merits questions myself at the moment, I'll just leave it there for now.
Many are worked up about the majority's decision to remand the severability question back to Judge O'Connor. A few have even called Judge Elrod's and Judge Engelhardt's internal fortitude or general value as human beings into question over it. I don't think that sort of personal attack on federal judges is appropriate or helpful, particularly when, as here, there are so many better explanations for why the judges in question proceeded as they did. I don't understand, for example, how the authors of these personal attacks can be so sure that Judges Elrod and Engelhardt didn't remand for the reasons they gave in the majority opinion (that since (1) Judge Haynes's opinion on severability for the en banc Court in Collins v. Mnuchin was published while this case was already on appeal and (2) the federal government raised a bunch of new severability arguments on appeal, Judge O'Connor should have the chance to address the impact of those developments in the first instance).
In any event, by emphasizing that courts have a duty to "refrain from invalidating more of the statute than necessary" and instructing Judge O'Connor to focus more attention on the intent of the 2017 Congress as opposed to the 2010 Congress when evaluating severability, the majority opinion strongly suggested that Judge O'Connor went astray in holding the entire ACA inseverable from the mandate.
I have a lot more to say about this case so please stay tuned ....