Texas v. Rettig

• Decision Date: 09 April 2021
• Docket Number: No. 18-10545,18-10545
• Parties: State of TEXAS; State of Kansas; State of Louisiana; State of Indiana; State of Wisconsin; State of Nebraska, Plaintiffs—Appellees/Cross-Appellants, v. Charles P. RETTIG, in His Official Capacity as Commissioner of Internal Revenue; United States of America; United States Department of Health and Human Services; United States Internal Revenue Service ; Xavier Becerra, Secretary, U.S. Department of Health and Human Services, Defendants—Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

993 F.3d 408 (Mem)

State of TEXAS; State of Kansas; State of Louisiana; State of Indiana; State of Wisconsin; State of Nebraska, Plaintiffs—Appellees/Cross-Appellants,

v.Charles P. RETTIG, in His Official Capacity as Commissioner of Internal Revenue; United States of America; United States Department of Health and Human Services; United States Internal Revenue Service ; Xavier Becerra, Secretary, U.S. Department of Health and Human Services, Defendants—Appellants/Cross-Appellees.

No. 18-10545

United States Court of Appeals, Fifth Circuit.

FILED April 9, 2021

Lanora Christine Pettit, Office of the Attorney General, Office of the Solicitor General, Thomas A. Albright, Assistant Attorney General, Office of the Attorney General, Financial Litigation & Charitable Trusts Division, David J. Hacker, Office of the Attorney General of Texas, Environmental Protection Division, Austin, TX, for Plaintiffs-Appellees/Cross-Appellants.

Alisa Beth Klein, Esq., Mark Bernard Stern, Esq., U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, for Defendants-Appellants/Cross-Appellees.

Benjamin Gross Shatz, Manatt, Phelps & Phillips, L.L.P., Los Angeles, CA, for Amicus Curiae Medicaid Health Plans of America.

Sarah Katherine Hofstadter, Anna-Rose Mathieson, California Appellate Law Group, L.L.P., San Francisco, CA, for Amici Curiae America's Health Insurance Plans, Incorporated, Blue Cross Blue Shield Association.

Before Barksdale, Haynes, and Willett, Circuit Judges.¹

Per Curiam:

The court having been polled at the request of one of its members, and a majority of the judges who are in regular active service and not disqualified not having voted in favor ( Fed. R. App. P. 35 and 5th Circ. R. 35 ), the petition for rehearing en banc is DENIED.

In the en banc poll, five judges voted in favor of rehearing (Judges Jones, Smith, Elrod, Ho, and Duncan), and eleven judges voted against rehearing (Chief Judge Owen, and Judges Stewart, Dennis, Southwick, Haynes, Graves, Higginson, Costa, Willett, Engelhardt, and Wilson).

James C. Ho, Circuit Judge, joined by Jones, Smith, Elrod, and Duncan, Circuit Judges, dissenting from denial of rehearing en banc:

For those who believe in the text and original understanding of the Constitution, the panel decision is troubling for at least two different reasons.

First, the Constitution vests lawmaking power in the most politically accountable branch of our government—the Congress of the United States. Yet the panel blesses the placement of lawmaking power in purely private hands, wholly unaccountable to the people. That devalues the right to vote and desecrates the entire premise of our constitutional democracy—that our laws are supposed to be written by members of Congress elected by the American people, not by private interests pursuing unknown private agendas.

Second, judges swear an oath to uphold the Constitution, consistent of course with a judicial system based on precedent. That should mean that we decide every case faithful to the text and original understanding of the Constitution, to the maximum extent permitted by a faithful reading of binding precedent. Dutiful application of this standard is vital to respecting and restoring our nation's founding principles. But rather than apply this standard, the panel instead extends precedent unnecessarily, in a strained effort to uphold the uniquely unlawful delegation challenged here.

The Constitution vests "[a]ll legislative Powers herein granted" in Congress. U.S. CONST. art. I, § 1. And it makes clear that "any Bill ... shall not be a Law" unless it has complied with the bicameralism and presentment requirements of Article I. U.S. CONST. art. I, § 7, cl. 2. These provisions do not permit Congress to delegate its lawmaking powers elsewhere, any more than they permit the President to delegate the power to sign legislation. See , e.g. , Gundy v. United States , ––– U.S. ––––, 139 S. Ct. 2116, 2121, 204 L.Ed.2d 522 (2019) (plurality opinion by Kagan, J.) ("The nondelegation doctrine bars Congress from transferring its legislative power to another branch of Government."). See also , e.g. , Electronic Presentment and Return of Bills , 35 Op. O.L.C. 51, 62 (2011) ("[T]he President ... could not delegate his constitutional signing responsibility."); Whether the President May Sign a Bill by Directing That His Signature Be Affixed to It , 29 Op. O.L.C. 97, 124 (2005) (same).

This prohibition on delegation might seem inconvenient and inefficient to those who wish to maximize government's coercive power. But the purpose of the nondelegation doctrine is not to serve Congress, but to preserve liberty. See , e.g. , Dep't of Transp. v. Ass'n of Am. R.Rs. , 575 U.S. 43, 61, 135 S.Ct. 1225, 191 L.Ed.2d 153 (2015) (Alito, J., concurring) ("The principle that Congress cannot delegate away its vested powers exists to protect liberty.").

" ‘[B]icameralism and presentment make lawmaking difficult by design .’ " Id. (quoting John F. Manning, Lawmaking Made Easy , 10 GREEN BAG 2D 191, 202 (2007) ). This "deliberative process was viewed by the Framers as a valuable feature, ... not something to be lamented and evaded." Id. Indeed, "the framers went to great lengths to make lawmaking difficult," for "[a]n ‘excess of law-making’ was, in their words, one of ‘the diseases to which our governments are most liable.’ " Gundy , 139 S. Ct. at 2134 (Gorsuch, J., dissenting) (quoting THE FEDERALIST No. 62 (James Madison)). The processes for new legislation may be "arduous," "but to the framers these were bulwarks of liberty." Id.

The modern administrative state illustrates what happens when we ignore the Constitution: Congress "pass[es] problems to the executive branch" and then engages in "finger-pointing" for any problems that might result. Id. at 2135. The bureaucracy triumphs—while democracy suffers.

That's why our Founders deliberately designed the legislative power to be exercised "only by elected representatives in a public process"—so that "the lines of accountability would be clear" and "[t]he sovereign people would know, without ambiguity, whom to hold accountable."

Id. at 2134. In short: When it comes to lawmaking, the buck stops with Congress.

Admittedly, the nondelegation doctrine has been more honored in the breach than in the observance. "[S]ince 1935, the Court has uniformly rejected nondelegation arguments and has upheld provisions that authorized agencies to adopt important rules pursuant to extraordinarily capacious standards." Id. at 2130–31 (Alito, J., concurring).

So when the panel upheld the unlawful delegation of legislative power challenged in this case, it no doubt assumed it could invoke precedents reflecting the general dormancy and underenforcement of the nondelegation doctrine, and call it a day.

But fidelity to the Constitution requires much more than this. Critical features of the delegation challenged here make it categorically different from—and unsupportable under—current precedent.

To begin with, this case involves a delegation of lawmaking power, not to another governmental entity, but to private bodies wholly unaccountable to the citizenry. In addition, the delegation was effectuated not by Congress, but at the whim of an agency—and without Congressional blessing of any kind. There is no precedent that permits this kind of "double delegation" from Congress to public bureaucrats to private parties—no case cited by the panel or the parties, and no case that I have independently uncovered.

To the contrary, the Supreme Court has made clear that delegation to "private persons" is "legislative delegation in its most obnoxious form ." Carter v. Carter Coal Co. , 298 U.S. 238, 311, 56 S.Ct. 855, 80 L.Ed. 1160 (1936) (emphasis added). "[F]or it is not even delegation to an official or an official body." Id. Delegation of legislative power to private entities is "unknown to our law" and "utterly inconsistent with the constitutional prerogatives and duties of Congress." A.L.A. Schechter Poultry Corp. v. United States , 295 U.S. 495, 537, 55 S.Ct. 837, 79 L.Ed. 1570 (1935).

After all, "[w]hen it comes to [delegating to] private entities, ... there is not even a fig leaf of constitutional justification." Ass'n of Am. R.Rs. , 575 U.S. at 62, 135 S.Ct. 1225 (Alito, J., concurring). "Private entities are not vested with ‘legislative Powers.’ Nor are they vested with the ‘executive Power,’ which belongs to the President." Id. (citations omitted). Indeed, "[e]ven the United States accepts that Congress ‘cannot delegate regulatory authority to a private entity.’ " Id. at 61, 135 S.Ct. 1225.

At bottom, the regulation challenged here is uniquely offensive to the Constitution—and unsupported by precedent—for three reasons: (1) It subdelegates substantive lawmaking power, rather than some minor factual determination or ministerial task; (2) the subdelegation is authorized by an administrative agency, rather than by Congress; and (3) the agency is subdelegating power to a private entity, rather than to another governmental entity that is at least minimally accountable to the public in some way.

Not a single one of the precedents cited by the panel involves this toxic combination of constitutional abnormalities. Not one of them prevents us from enforcing the Constitution and the democratically accountable government for which it stands.

I dissent from the denial of rehearing en banc. The right to vote means nothing if we abandon our constitutional commitments and allow the real work of lawmaking to be exercised by private interests colluding with agency bureaucrats, rather than by elected officials accountable to the American voter.¹

I.

The Medicaid program provides financial assistance to low-income individuals so that they may obtain medical care. "States have two options for providing care to Medicaid beneficiaries: a ‘fee-for-service’ model and a managed-care model." Texas v. Rettig , 987 F.3d 518, 524 (5th Cir. 2021). "Under the ... managed-care model, the state...