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The Risks to the ACA of a Standing Decision in California v. Texas Are Overstated (Updated)

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The Supreme Court’s announcement that it would issue opinions this past Wednesday set off a flurry of speculation that the justices would be issuing their decision in California v. Texasthe latest Affordable Care Act challenge to reach One First Street (about which I’ve blogged extensively). One theory was that the Court might have been rushing to get the decision out so as to relieve the Biden Administration of the potentially difficult decision whether to withdraw the Trump Administration’s anti-ACA brief and substitute it with a brief defending the ACA. Alas, all we got was opinions on Foreign Sovereign Immunity for the expropriation of property during World War II and disability benefits under the Railroad Retirement Act.

On Tuesday, my co-blogger Josh Blackman suggested that there was a risk in withdrawing the Trump Administration’s brief insofar as it might encourage the Court to rule on standing. In an uncharacteristic move, the Trump Administration largely conceded that the plaintiffs had standing to challenge the mandate-sans-penalty, and the Biden Administration would be likely to take the other side, both because it would like to defend the ACA and because the Justice Department is usually more aggressive in seeking to deny standing to plaintiffs challenging federal laws. In addition, the plaintiffs’ arguments in favor of Article III standing are quite weak on the merits.

In his post, Blackman wrote:

[The Biden Administration] would prefer to win on the merits, or win on severability. But a win on standing would be short-lived. In the future, the federal government will take some enforcement action in Texas against a person based on the ACA. And that defendant, relying on circuit precedent, could argue that the entire ACA is unconstitutional. In this case, there would be no doubts about standing. The Biden Administration does not want the validity of the ACA floating in doubt for the next three years. In 2010, DOJ argued that the Tax Anti-Injunction Act did not bar the original ACA challenge. The Obama Administration wanted order to settle the validity of the law before the election.

I disagree with this analysis.

For starters, should the Supreme Court conclude that the plaintiffs lack standing in California v. Texas, there would be no “circuit precedent” to rely upon to assert standing in a subsequent case in the Fifth Circuit. If the plaintiffs lacked standing, this means there was no jurisdiction to hear the case, and the Fifth Circuit’s opinion below would be vacated. It would have no precedential value whatsoever. Moreover, any decision concluding the plaintiffs lack standing would likely be based upon the conclusion that a law that imposes no actual or threatened consequence cannot impose an Article III injury, which would certainly influence the analysis of a circuit panel in any subsequent case.**

What about the other scenario Blackman suggests, in which a defendant to a government enforcement action under the ACA seeks to revive the plaintiffs’ claims? I do not see that as a serious risk either. While there was some interesting discussion at oral argument about whether a defendant charged with violating one provision of a law could ever seek to escape prosecution by alleging that a another separate-yet-inseverable provision of the law is unconstitutional, there is no precedent for such a move, and it is easy to see why.

Congress routinely enacts large sprawling pieces of legislation containing many separate provisions, some small fraction of which may be unconstitutional (see, e.g., Sarbanes-Oxley, Dodd-Frank, or the Cable Television Consumer Protection and Competition Act). Yet courts have never concluded that those subject to the enforcement of one part of the law can defend themselves by identifying constitutional infirmities in other parts of the law. Thus, those subject to enforcement actions under the ACA have not been making the anti-mandate arguments in their defense (nor did they claim the ACA was invalid because of other potentially unconstitutional provisions in the law as it was enacted, such at the Independent Payment Advisory Board). Nor have we seen such arguments raised in defenses against prosecutions under any of these other laws–and we certainly have not seen courts considering or accepting such arguments.

The reason such arguments have not been raised is rather clear: Standing is not dispensed in gross. A litigant needs standing for each element of their claim, and for each portion of a law they are challenging. That the Consumer Financial Protection Board may have had an unconstitutional structure (as the Supreme Court concluded in Seila Law) did not mean that each and every defendant to a prosecution under each and every provision of the Dodd-Frank Act could raise this issue and force the reviewing court to consider the constitutionality of the CFPB and whether the CFPB was severable from the provision under which those defendants were being prosecuted. Such an approach is not only without precedent. It would also make a hash of both the law of standing and severability, and would impose tremendous burdens on federal courts as routine enforcement cases metastasized into major constitutional cases. Just as the plaintiffs need to have standing to challenge the mandate-sans-penalty, any defendant seeking to challenge the mandate-sans-penalty would need standing for that challenge as well.

My bottom line: If the Supreme Court decides California v. Texas on standing grounds, it will likely do so in a way that prevents future plaintiffs from trying to resuscitate the claims in this case, and it will not leave the ACA vulnerable to collateral challenge based on the plaintiffs’ theory in actions enforcing other provisions of the Act.

** UPDATE: Just to expand on this one point flagged above: If the Court dismissed California v. Texas on standing grounds, this would be based upon the conclusion that no plaintiff has standing. In other words, this would mean that the Court concluded that the individual plaintiffs have not suffered an injury from the mandate-sans-penalty and that the states have not suffered an Article III injury, either from the mandate itself, or from other provisions of the Act that the plaintiff states claim impact them. This would largely settle the matter.

If the Court concludes the plaintiff states do not have standing, it will have concluded that the costs imposed on Texas by the other ACA provisions Texas has cited in this case do not provide standing to challenge the mandate. In the face of such a holding, it would be difficult leave open the possibility that some other (non-state) plaintiff could use some other injuries caused by still other portions of the statute as a basis for standing to challenge the mandate. In other words, if the Court concludes there is no standing here, it will be difficult for a future plaintiff (or defendant) to claim standing to challenge the mandate-sans-penalty in a future case, and this particular issue will not remain much of a threat to the ACA.


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