The most recent episode of the Coale Mind podcast discusses Mi Familia Vota v. Abbott, No. 20-50793 (Oct. 14, 2020), a challenge to several Texas voting laws in light of the COVID-19 pandemic. The case reminds of two important limits on federal judicial power in such disputes:

• Under Ex parte Young (Mr. Young appears to the right): “Although a court can enjoin state officials from enforcing statutes, such an injunction must be directed to those who have the authority to enforce those statutes. In the present case, that would be county or other local officials.” 
• And naming the right defendant is only the first hurdle posed by federalism: “An examination of the relief that the Plaintiffs seek in the case before us reveals that in many instances, court-ordered-relief would require the Governor or the Secretary of State to issue an executive order or directive or to take other sweeping affirmative action. If implemented by the district court, many of the directives requested by the Plaintiffs would violate principles of federalism.”

“[C]ourt changes of election laws close in time to the election are strongly disfavored. … [I]n staying a preliminary injunction that would change election laws eighteen days before early voting begins, we recognize the value of preserving the status quo in a voting case on the eve of an election, and we find that the traditional factors for granting a stay favor granting one here.” Texas Alliance for Retired Americans v. Hughs, No. 20-40643 (Sept. 30, 2020).

A home health care provider, feeling trapped by Medicare’s slow and complex administrative review process, sought relief in court. The Fifth Circuit affirmed the denial of its application for an injunction, observing: “The Constitution entrusts the political branches, not the judiciary, with making difficult and value-laden policy decisions. There were an infinite number of schemes Congress could have reasonably selected. Congress settled on one that guarantees at least two levels of administrative review and judicial review. And in the case of a backlog, Congress provided the ability to bypass long waits on the way to judicial review. Sahara rejected that option. At bottom, Sahara  believes a different scheme would be better. But we lack the power to change it.” Sahara Health Care v. Azar, No. 18-41120 (Sept. 18, 2020) (emphasis added).

The opinion also provides an original source for the saying, “[t]he best laid plans of mice and men oft go awry” —

“Applying Skidmore, we ask whether EPA’s interpretation of Title V in the Hunter Order is persuasive. Specifically, we inquire into the persuasiveness of EPA’s current view that the Title V permitting process does not require substantive reevaluation of the underlying Title I preconstruction permits applicable to a pollution source. As we read it, the Hunter Order defends the agency’s interpretation based principally on Title V’s text, Title V’s structure and purpose, and the structure of the Act as a whole. Having examined these reasons and found them persuasive, we conclude that EPA’s current approach to Title V merits Skidmore deference.” Environmental Integrity Project v. EPA, No. 18-60384 (Aug. 13, 2020) (emphasis added).

OSHA regulations have an exemption for “diving performed solely as a necessary part of a scientific, research, or educational activity by employees whose sole purpose for diving is to perform scientific research tasks. Scientific diving does not include performing any tasks usually associated with commercial diving such as: Placing or removing heavy objects underwater; inspection of pipelines and similar objects; construction; demolition; cutting or welding; or the use of explosives.”

OSHA concluded that the divers who clean the tanks at the Houston Aquarium were not “scientific divers” under this regulation; the Fifth Circuit saw otherwise: “The divers are engaged in a ‘studious … examination’ and ‘detailed study’ when they observe the animals for abnormalities, and when they work to keep the animals in the Aquarium alive, healthy, and breeding. That an organization collaborates among employees and engages in verbal communication does not mean that the examination and study of the animals in the tanks is not ‘studious’ or ‘detailed.’ Nothing about the feeding and cleaning dives renders the information that the trained scientists performing the dives gather during these dives outside of the definition of ‘research.’” Houston Aquarium, Inc. v. OSHRC, No. 19-60245 (July 15, 2020).

A manufacturer of vaping liquid, invoking the structural limitations imposed on administrative agencies by the delegation doctrine, challenged the FDA’s power to regulate it. The Fifth Circuit observed: “The [Supreme] Court might well decide—perhaps soon—to reexamine or revive the nondelegation doctrine. But ‘[w]e are not supposed to . . . read tea leaves to predict where it might end up.'” (citation omitted). That observation was case-dispositive: “The [Supreme] Court has found only two delegations to be unconstitutional. Ever. And none in more than eighty years.” Under that precedent, Congress’s delegation of authority to the FDA in this area showed a “sufficiently intelligible principle,” constrained by Congress’s definition of “tobacco product,” and by Congress having “ma[de] many of the key regulatory decisions itself.” Big Time Vapes, Inc. v. Food & Drug Admin., No. 19-60921 (June 25, 2020).

A Texas business alleged that the CARES Act impermissibly discriminated against it as a bankruptcy debtor. The Fifth Circuit, citing its rule of orderliness, noted that it “has concluded that all injunctive relief directed at the [Small Business Administration] is absolutely prohibited.” Accordingly, “the bankruptcy court exceeded its authority when it issued an injunction against the SBA administrator … .” Hidalgo County Emergency Service Foundation v. Carranza, No. 20-40368 (June 22, 2020).

Despite the complexity of a dispute about telecommunication regulations, the parties’ performance mattered: “Sprint and Verizon’s conduct, while certainly not dispositive, is nevertheless informative. Sprint and Verizon are among America’s largest IXCs and are sophisticated market participants. Yet, they waited more than eighteen years to object to the LECs’ access charges for intraMTA wireless-to-wireline calls, paying hundreds of millions of dollars in the process. Moreover, over that same timeframe, Sprint’s and Verizon’s LEC affiliates imposed access charges on IXCs, including on each other, for intraMTA wireless-to-wireline calls. We decline to award Sprint and Verizon, who sat on their hands for the better part of two decades, a nine-figure windfall based on an interpretation of § 251(g) that is divorced from both the 1996 Act’s text and industry practice.”  No. 18-10768 (May 27, 2020). (LPCH was one of the counsel for the prevailing side of this case.)

“For a generation, the State of Texas and a federally recognized Indian tribe, the Ysleta del Sur Pueblo, have litigated the Pueblo’s attempts to conduct various gaming activities on its reservation near El Paso. This latest case poses familiar questions that yield familiar answers: (1) which federal law governs the legality of the Pueblo’s gaming operations—the Restoration Act (which bars gaming that violates Texas law) or the more permissive Indian Gaming Regulatory Act (which “establish[es] . . . Federal standards for gaming on Indian lands”); and (2) whether the district court correctly enjoined the Pueblo’s gaming operations.” Unfortunately for the tribe, the Fifth Circuit found that a previous opinion conclusively settled these issues in favor of the State of Texas. The opinion also discusses the proper scope of injunctive relief for such a situation. Texas v. Ysleta del Sur Pueblo, No. 19-50400 (April 2, 2020).

DISH Network declared an impasse after lengthy negotiations with the Communication Workers of America. The NLRB rejected that declaration; the Fifth Circuit reversed the NLRB’s factual determination: “The Board’s decision rested on its determination that the Union’s November 2014 counterproposal was a ‘white flag’ of surrender. But the ‘white flag’ characterization in turn rested on an unsound factual foundation from the ALJ” about how unionized employees reacted to a particular compensation system as compared to nonunionized ones. DISH Network Corp. v. NLRB (revised March 24, 2020).

Surprising no one, the constitutional challenge to the CFPB’s structure presented by CFPB v. All American Check Cashing will be reviewed en banc by the full Fifth Circuit.

The ground rules for the administrative state are few, important, and vexingly difficult to apply. The en banc court confronted the structure of Fannie Mae’s regulator, the Federal Housing Finance Agency, in Collins v. Mnuchin, 938 F.3d 553 (5th Cir. 2019), and found it wanting constitutionally. In CFPB v. All American Check Cashing, a panel majority confronted the structure of another Great Recession entity, the Consumer Finance Protection Board, and concluded that “neither the text of the Constitution nor the Supreme Court’s previous decisions support the Appellants’ arguments that the CFPB is unconstitutionally structured.” No. 18-60302 (March 3, 2020).

A concurrence elaborated: “The President can remove the CFPB Director only for ‘inefficiency, neglect of duty, or malfeasance in office,’ a broad standard repeatedly approved by the Supreme Court. That alone is enough to decide this case. If there is any threat of undue concentration of power, the Office of President is its beneficiary.” A dissent faulted the majority’s reasoning and the judicial process employed: “Collins winds up in the dustbin because two judges say it should. At one time, those judges thought it beyond the pale ‘to rely on strength in numbers rather than sound legal principles in order to reach their desired result in [a] specific case.’ Now, they suddenly discover that stare decisis is for suckers.” (footnotes omitted).

The General Land Office of Texas disputed the Interior Department’s decision to continue protection of the golden-cheeked warbler as an endangered species. The Fifth Circuit found the Department’s process flawed: “The Service recited this standard, but a careful examination of its analysis shows that the Service applied an inappropriately heightened one.Specifically, to proceed to the twelve-month review stage, the Service required the delisting petition to contain information that the Service had not considered in its five-year review that was sufficient to refute that review’s conclusions. . . .The Service thus based its decision to deny the delisting petition on an incorrect legal standard. Consequently, we conclude that the Service’s decision was arbitrary and capricious. We therefore vacate that decision and remand for the Service to evaluate the delisting petition under the correct legal standard.” General Land Office of Texas v. U.S. Dep’t of the Interior, No. 19-50178 (Jan. 15, 2020) (emphasis in original).

A Chevron dispute about the Department of the Interior’s collection of natural gas royalties led to the question whether “the agency must credit all of W&T’s prior overdeliveries in calculating the cumulative delivery shortfall.” Observing that the defense of “equitable recoupment is ‘never barred by the statute of limitations so long as the main action itself is timely,'” the Fifth Circuit rejected the Department’s three arguments against its application – looking to three common reference points for resolving such disputes:

1. Statutory limitations. A statutory prohibition on “pursu[it of] any other equitable or legal remedy, whether under statute or common law” did not clearly preclude the assertion of this defense;
2. Factual linkage. “This objection is easily dispatched, as the Department of the Interior’s requirement that payments be made on a monthly basis does not trump the reality that each monthly obligation arises from a single contract: the lease.
3. Overall equities. The Department’s facially “neutral application of the statute of limitations across the industry does not counteract the inequitable result that W&T suffered  . . . .”

W&T Offshore v. Bernhardt, No. 18-30876 (Dec. 23, 2019).

The Fifth Circuit affirmed a Tax Court decision about a $52 million “bad debt” deduction, observing: “Baker Hughes’ authorities all involved a bona fide debt. … No authority shown to us holds that a bad-debt deduction applies to a guarantor’s payment on a guarantee that does not create a debtor-creditor relationship with the party whose original obligation is extinguished.” Baker Hughes Inc. v. United States, No. 18-20585 (Nov. 21, 2019).

The Fifth Circuit reversed an OSHA determination that a company had failed to justify an untimely response, noting that under Fed. R. Civ. P. 60(b)(1) (which OSHA has adopted for this particular situation): “The excusable neglect inquiry is not limited to whether a party’s mistake caused the delay, such cause being expressed in the term ‘neglect,’ but equally concerns whether the party’s mistake or omission was ‘excusable.’ Focusing narrowly on whether a party is at fault for the delay and denying relief if it bears any blame clearly conflicts with Pioneer‘s more lenient and comprehensive standard.” Coleman Hammons Constr. Co. v. OSHA, No. 18-60559 (Nov. 6, 2019).

The EPA approved Louisiana’s plan for controlling haze; both environmental and industry groups protested. The Fifth Circuit affirmed the EPA’s approval under the “arbitrary and capricious” standard of review.

As to industry: “We afford ‘significant deference’ to agency decisions involving analysis of scientific data within the agency’s technical expertise. The EPA’s selection of a model to measure air pollution levels is precisely that type of decision. The EPA therefore did not act arbitrarily and capriciously in relying on the CALPUFF model to approve Louisiana’s [statutorily-required] determinations.”

As to environmental groups: “Louisiana’s explanation of its . . . determination . . . omitted two of the five mandatory factors and failed to compare—or even set out—the numbers for the costs and benefits of the control options Louisiana considered. Louisiana also failed to explain how its decision accounted for the EPA-submitted analyses that pointed out substantial flaws in other analyses in the administrative record. But applying the deferential standards of the Administrative Procedures Act to the facts of this case, we hold that the EPA’s approval of Louisiana’s [plan] was not arbitrary and capricious.” Sierra Club v. EPA, No. 18-60116 (Oct. 3, 2019).

The full Fifth Circuit engaged the boundaries of the administrative state in Collins v. Mnuchin. A 9-7 majority of the en banc Court found that the FHFA (the regulator of Fannie Mae and Freddie Mac) was structured unconstitutionally; a different 9-7 majority found that the appropriate remedy was a go-forward restructure of the agency rather than the unwinding of a significant, previously-ordered financial transaction. (If the below is hard to read in your browser, just click on it to see it full-sized).

Four Republican appointees joined the majority on remedy, two of whom–Judges Owen and Duncan–had joined the majority on constitutionality.

Among the various concurrences and dissents, Judges Ho and Oldham concurred to emphasize the significance of the case to other administrative agencies, while Judges Costa and Higginson dissented on the basis of the plaintiffs’ standing.

The diverse approaches of the Republican-appointed judges underscore the frequent observation on this blog that the term “conservative” is a broad umbrella for different perspectives on distinct aspects of the apparatus of government.

Conservative thinkers frequently express skepticism about the administrative state, and in particular, the Chevron doctrine about judicial deference to it. A powerful counterpoint to that line of thinking, and an equally orthodox part of conservative philosophy, appears in the Fifth Circuit’s recent opinion in Center for Biological Diversity v. EPA, which found a lack of standing to challenge an EPA discharge permit and reminded: “’For the federal courts to decide questions of law arising outside of cases and controversies would be inimical to the Constitution’s democratic character.’ It would improperly transform courts into ‘roving commissions assigned to pass judgment on the validity of the Nation’s laws’ and agency actions. In our Government, there are entities that address environmental issues outside of the case-or-controversy constraint. This Court is not one of them. As Judge Sentelle put it many years ago: ‘The federal judiciary is not a backseat Congress nor some sort of super-agency.’“ No. 18-60102 (Aug. 30, 2019) (citations omitted).

The complexity of the modern administrative state produces ornate procedural problems – specifically, in Wynnewood Refining Co. v. OSHRC, the challenge of two parties appealing an administrative-agency ruling to two different federal circuit courts.  The solution, however, is simple, in the form of a strict “first-to-file” rule established by Congress for this problem: “Th[is] first-to-file rule governs even for petitions filed on the same day; indeed, we have applied it even when petitions were filed within a minute of each other.” The Fifth Circuit rebuffed an attempt by the agency to assert its discretion over which petition was filed first, concluding that Congress had drafted this statute to foreclose precisely such discretion. No. 19-60357 (Aug. 2, 2019).

In Brackeen v. Bernhardt, an opinion of enormous significance to Indian law, the Fifth Circuit found the Indian Child Welfare Act to be constitutional, reversing a district-court opinion that held otherwise. The Court also affirmed various Bureau of Indian Affairs regulations under the Chevron doctrine, noting, inter alia: “The mere fact that an agency interpretation contradicts a prior agency position is not fatal. Sudden and unexplained change, or change that does not take account of legitimate reliance on prior interpretation, may be arbitrary, capricious [or] an abuse of discretion. But if these pitfalls are avoided, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency.” No. 18-11479 (Aug. 9, 2019) (citation omitted). (My colleague Paulette Miniter and I assisted Professor Seth Davis of UC-Berkeley with an amicus brief in this case, in support of the result ultimately reached by the Court.)

After a recent en banc vote, the full Fifth Circuit will engage an important limit on the power of the administrative state. The majority and dissenting opinons in Sierra Club v. Luminant Energy grappled with the “concurrent-remedies doctrine” and whether it created a limitations bar to an action for equitable relief under the Clean Air Act. No. No. 17-10235 (order issued June 10, 2019).

In a detailed (and remarkably readable) review of EPA regulations of water pollution by steam-electric power plants, the Fifth Circuit vacated and remanded a rule for further agency consideration. In a nutshell: “[F]or five of the six wastewater streams regulated by the final rule . . ., EPA affirmatively rejected surface impoundments as [“Best Available Technology”] ‘because [they] would not result in reasonable further progress toward eliminating the discharge of all pollutants, particularly toxic pollutants.’ And yet, having rejected impoundments as BAT because they would not achieve ‘reasonable further progress’ toward eliminating pollution from those streams, EPA turned around and chose impoundments as BAT for each of those same streams generated before the compliance date. That paradoxical action signals arbitrary and capricious agency action.” (emphasis added, citations omitted). Southwestern Elec. Power Co. v. EPA, No. 15-60821 (April 12, 2019).

A 1994 Fifth Circuit opinion addressed whether the “Indian Tribes of Texas Restoration Act” or the “Indian Gaming Restoration Act” controlled Indian gaming in Texas (answer, the Restoration Act). In 2015, the National Indian Gaming Commission, citing intervening Supreme Court precedent, ruled otherwise. The Fifth Circuit declined to extend Chevron deference to that later ruling, noting:

“[This case] requires us to apply Chevron step one to a prior judicial interpretation and to determine whether that court employed traditional tools of statutory interpretation and found that Congress spoke to the precise issue. That is what Ysleta I did in holding that “the Restoration Act prevails over IGRA when gaming activities proposed by [the Pueblo or Tribe] are at issue. Consequently, the NIGC’s decision that IGRA applies to the Tribe does not displace Ysleta I.”

State v. Alabama-Coushatta Tribe, No. 18-40116 (March 14, 2019).

In Louisiana Real Estate Appraisers Board v. FTC, the Fifth Circuit declined to apply the “collateral order” doctrine to an interlocutory order of an administrative agency, leaving open the possibility that the doctrine could so be applied in a different situation. No. 18-60291 (Feb. 28, 2019).

The fractured panel in Collins v. Mnuchin, which addressed the legality of “sweeps” of funds from Fannie Mae and Freddie Mac by their regulator, led to a fascinating en banc argument today in New Orleans as the Court reviewed fundamental administrative-law issues.

The dusky gopher frog returns to the Fifth Circuit; the Supreme Court has reversed a decision about judicial review of the Fish & Wildlife Service’s treatment of the endangered frog’s habitat, reached after a close denial of en banc review. In the meantime, the Fifth Circuit’s makeup has materially changed in ways that likely predispose the full court toward a different view of the underlying administrative-law issues.

Even in the complex world of the modern administrative state, the Social Security Administration stands alone as “the Mount Everest of bureaucratic structures.” Barrett v. Berryhill, No. 17-41177 (revised Oct. 16, 2018) (citation omitted). Surveying that landscape, the Fifth Circuit concluded that a person claiming disability benefits did not have an automatic right to cross-examine a “medical consultant,” a doctor who reviews records without examining the claimant: “We do not mean to say that the opinions of medical consultants are unimportant or error free. But granting an automatic right to subpoena them is too strong a medicine. We do not see why examination of a medical consultant will always, or even usually, lead to meaningful impeachment. That is especially true when, as in this case, the [relevant] form is reviewed by a second medical consultant, lessening the risk of error. When a claimant has legitimate concerns that a[] . . . form is inaccurate or misleading, existing regulations provide the opportunity to question the drafter.” (emphasis in original).

The modern administrative state often requests documents for compliance and enforcement purposes; such a request led to a Fourth Amendment challenge to a subpoena from the Texas Medical Board in Barry v. Freshour. The challenge was made by a doctor who practiced at the facility that received the request. The Fifth Circuit rejected the doctor’s challenge and reversed the district court’s ruling in his favor: “The district court concluded Barry had standing because the records were sought in a proceeding against him and the subpoena was addressed to him personally (though it was also addressed to the records custodian). But the Supreme Court has rejected a ‘target’ approach to Fourth Amendment standing that would look to whether the evidence obtained could be used against the person seeking to challenge the search.” Here, “Barry relies on a list of pure privacy interests in the information the records contain. All but one, as he concedes, are specifically tied to his patients’ privacy interests in their own medical records. To the extent such interests are constitutionally cognizable, they cannot be asserted by Barry.” No. 17-20726 (Oct. 4, 2018).

The “concurrent-remedies doctrine” holds that “when the jurisdiction of the federal court is concurrent with that of law, or the suit is brought in aid of a legal right, equity will withhold its remedy if the legal right is barred by the local statute of limitations.” In Sierra Club v. Luminant Energy, that doctrine would have barred a private litigant’s claim for an injunction when a damages claim was time-barred – but it was held not to apply to a request for injunctive relief brought by the U.S. in its capacity as sovereign. On the merits of the request, the panel majority noted that “the statute of limitations that barred the legal relief [of damages] does not itself bar equitable relief unless it constitutes a penalty,” and left the question of whether the relief was in fact a penalty for the district court on remand. A dissent reasoned that “both of these so-called forms of injunctive relief are really just time-barred penalties in disguise,” would have affirmed dismissal of the entire case on limitations grounds, and avoided the issue about applying the concurrent-remedies doctrine to sovereigns. No. 17-10235 (Oct. 1, 2018).

After a thorough review of the “fundamental relationship between a relator and the Government in qui tam actions,” the Fifth Circuit concluded that private relators  dismissal of an action with prejudice did not bind the non-intervening U.S. government: “[R]elators sought to abandon their claims because they no longer wished to participate in the litigation. In other words, they acted on purely private interests. The Government—even one that chooses not to intervene—should not be bound by this decision, powerless to vindicate the public’s interests in other actions that may have a stronger basis or a relator more able to shoulder the burdens of litigation.” U.S. ex rel. Vaughn v. United Biologics LLC, No. 17-20389 (Sept. 7, 2018).

The Consumer Financial Protection Bureau – the subject of ongoing litigation about the constitutionality of its structure, which has been at issue in the recent Kavanaugh hearings – lost a challenge to a civil investigative demand in CFPB v. The Source for Public Data: “The CFPB did not comply with 12 U.S.C. § 5562(c)(2) when it issued this CID to Public Data. First, it did not state the ‘conduct constituting the alleged violation which is under investigation.’ According to its Notification of Purpose, the CFPB is investigating ‘unlawful acts and practices in connection with the provision or use of public records information.’ Simply put, this Notification of Purpose does not identify what conduct, it believes, constitutes an alleged violation. . . . Moreover, this CID does not identify ‘the provision of law applicable to such violation.’ As discussed, the CID never identifies an alleged violation, so it is unsurprising that it fails to identify a relevant provision of law.” No. 17-10732 (Sept. 6, 2018).

Federal crop insurance “protects an asset that does not yet exist,” since future crops are not yet grown. Congress refined the applicable statutes in 2014, allowing farmers to “elect to exclude” certain low-production years from the historical calculations needed to write insurance for future crop production. The relevant amendment applied “for any of the 2001 and subsequent crop years,” and became effective immediately. A dispute arose between Texas winter wheat farmers, who announced their intention to exclude years under this statute, and the Federal Crop Insurance Corporation, who said it lacked time to prepare the necessary data. The Fifth Circuit rejected the FCIC’s argument that this statute’s “effective” date was distinct from its “implementation” date, finding that it failed step one of Chevron – “Such a problem arises not from an ambiguous text but from Congress implementing razor sharp deadlines without, at least according to the FCIC, sufficient resources. That does not give the FCIC authority to disregard the plain text of the statute . . . .” Adkins v. Silverman, No. 17-10759 (Aug. 7, 2018).

A difficult question of administrative law produced a divided panel in Collins v. Mnuchin. The panel majority concluded that the Federal Housing Finance Agency (a regulator for Fannie Mae and Freddie Mac created by Congress in the wake of the 2008 financial crisis) was unconstitutionally structured. After careful review of the Supreme Court’s precedents in the area, the panel excised a “for cause” limitation on the removal of FHFA’s director from the relevant statute, finding  that with this revision “the FHFA survives as a properly supervised executive agency.” One dissent took issue with that holding; another dissent criticized the majority’s conclusion that the specific FHFA action at issue – a “net worth sweep” requiring payment of substantial quarterly dividends to the Treasury by Fannie and Freddie – was within the scope of FHFA’s statutory authority and thus insulated from judicial review. No. 17-20364 (July 16, 2018).

Many years, ago, “the Supreme Court viewed the fashioning of statutory remedies as within the property judicial rule [u]nder the now-abandoned maxim that ‘a statutory right implies the existence of all necessary and appropriate remedies.'” But that view has changed, and now, “the judicial task is to interpret the statute Congress has passed.” Alexander v. Sandoval, 532 U.S. 275 (2001). Proceeding from that starting point, after a review of the text and structure of the Air Carrier Access Act of 1986, the Court agreed that the Act did not create a private right of action, and it recognized that earlier Circuit authority on the issue had been essentially overruled by the analytical framework in Sandoval. Stokes v. Southwest Airlines, No. 17-10760 (April 5, 2018).

By a 2-1 opinion, in Chamber of Commerce v. U.S. Dep’t of Labor, the Fifth Circuit struck down the “Fiduclary Rule,” a regulation that significantly expanded regulation of investment advisors. The majority’s analysis focused primarily on the traditional definition of a “fiduciary” (a discussion of broad general interest to all business litigators), and the canon of interpretation that “provisions of a text should be interpreted in a way that renders them compatible, not contradictory.” The dissent focused on how, “[o]ver the last forty years, the retirement-investment market has experienced a dramatic shift toward individually controlled retirement plans and accounts.” Notably, footnote 14 of the majority opinion observes that “the Chevron doctrine has been questioned on substantial grounds, including that it represents an abdication of the judiciary’s’ duty under Article III ‘to say what the law is,'” quoting recent opinions my Justice Thomas and then-Judge Gorsuch. No. 17-10238 (March 15, 2018).

Welding-safety regulations enacted under the Outer Continental Shelf Lands Act contain this definition: “You means a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a State lesssee granted a right-of-use and easement.” In United States v. Moss, the Fifth Circuit affirmed the dismissal of criminal charges against a contractor based on this set of regulations, agreeing that “you” – as defined above, and applied consistently with relevant canons of interpretation – could not be read to include a contractor. Weighing heavily against the government’s position was a long history of “virtually non-existent past enforcement of OCSLA regulations against contractors.” No. 16-30561 (Sept. 27, 2017).

2017 has not been kind to the administrative state, and neither was Burgess v. FDIC, No. 17-60579 (Sept. 7, 2017). An FDIC administrative law judge concluded that Burgess had misused bank property, the FDIC Board adopted those recommendations, and Burgess sought review in the Fifth Circuit. He sought an interim stay based upon his argument that the ALJ was an “inferior Officer” within the meaning of the Constitution’s Appointments Clause, and the Fifth Circuit agreed, citing the Supreme Court’s analysis of a similar position involving the U.S. Tax Court in Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991). In so doing, the Court parted ways with the D.C. Circuit’s analysis in Landry v. FDIC, 204 F.3d 1125 (2000), by concluding that final decision-making authority was not a prerequisite to Officer status. Accordingly, the Court granted the interim stay, finding that Burgess “has established a likelihood of success on the merits of his Appointments Clause challenge.”

After a pipeline breach, a federal regulator penalized ExxonMobil for violating safety rules. The Fifth Circuit reversed, finding, inter alia, that the agency’s interpretation of the “textually unambiguous” regulation required no deference under Auer v. Robbins, 519 U.S. 452 (1997). Specifically, the regulation said that pipeline operators “must consider” “all risk factors that reflect the risk conditions on the pipeline segment.” Concluding (presumably, after due consideration), that “consider” meant “to think about carefully,” the Court concluded that the regulation “unambiguously serves to informs a pipeline operator’s careful and deliberate decision-making process rather than to compel a particular outcome . . . ” This conclusion undermined the substantive basis of the agency’s liability determination, and led to reversal in substantial part. ExxonMobil Pipeline Co. v. U.S. Dep’t of Transp., No. 16-60448 (Aug. 14, 2017).

In Hills v. Entergy Operations, Inc., a case about overtime pay for security guards, the Fifth Circuit reversed a summary judgment based upon a conclusion about two guards’ lack of damage. While the Court’s holding was based upon technical issues of employment law, its underlying reasoning is of broader applicability: “We reverse the district court’s summary judgment that the fluctuating workweek method applies here as a matter of law. The underlying factual issue upon which the applicabilty of that method is predicated, what the employees clearly understood, should be decided at trial in due course.” No. 16-30924 (Aug. 4, 2017). Also, in a ruling of general interest about administrative law, the Court declined to follow an interpretive letter by the Department of Labor.

Sun-Tzu famously counseled, “[a]ll armies prefer high ground to low and sunny places to dark.” The defendant airline in Conservation Force v. Delta Air Lines artfully changed the ground for conflict in a case about its policies toward shipments involving big game hunts. The plaintiff complained that the airlines’ policy of not accepting the shipment of lion, leopard, elephant, rhino and buffalo hunting trophies violated the airlines’ legal duty to treat all shippers equally. The Fifth Circuit agreed with the district court’s conclusion “that, despite a duty to treat all shippers equally, a common carrier does not have to treat all cargo equally.” No. 16-11062 (March 20, 2017, unpublished).

Press coverage of Judge Neil Gorsuch’s nomination to the Supreme Court has noted his intelligent and accessible writing style, including use of a sentence diagram (left) in a criminal case that turned on what elements of the crime required proof of intent. In the same spirit, in dissent from the denial of en banc rehearing in a highly technical case about protection of the dusky gopher frog (right), Judge Edith Jones used a pair of Venn diagrams to illustrate her view of how the Endangered Species Act should operate (below left), contrasted with the panel opinion’s (below right). Markle Interests v. U.S. Fish & Wildlife Service, No. 14-31008 (Feb. 14, 2017).

A detailed review of tax statutes and other authorities resulted in affirmance of a judgment against Bombardier related to the taxation of its “Flexjet” program; the Court summarized: “Because the law and its application to the real world is continually evolving, it is only natural that guidance in Revenue Rulings evolves too. We find a consistent theme, though, in the IRS’s guidance from the earliest Revenue Rulings grappling with this issue: where an entity is responsible for nearly every service and precondition necessary to transport persons in an aircraft, and it charges for those services, it is providing taxable transportation – even if the bona fide owner of the aircraft itself is the person traveling.” Bombardier Aerospace Corp. v. United States, No. 15-10468 (July 25, 2016).

In an uncommon example of a successful application for an appellate stay, the Fifth Circuit stayed the EPA’s rulings about Texas’s haze reduction plans. The Court found a likelihood of success on the merits, based on, inter alia, the degree of deference required by EPA, the lack of on-point authority supporting its position, and statutory limits on its power. As to irreparable injury, the Court noted the substantial compliance costs faced by power companies (to the point of risking “unemployment and the permanent closure plants”), and the lack of any mechanism for them to recover those costs if the EPA’s rule was invalidated.  The Court also noted “the threat of grid instability and potential brownouts,” as well as the potential injury from a violation of the federalism principles in the Clean Air Act. Finally, the court “agree[s] with Petitioners that the public’s interest in ready access to affordable electricity outweighs the inconsequential visibility differences that the federal implementation plan would achieve in the near future.” Texas v. EPA, No. 16-60118 (July 15, 2016).

In a significant and technical dispute about Clean Air Act liability related to emissions at Exxon’s complex in Baytown Texas, the Fifth Circuit touched on a matter of broader interest about restitution/calculation of “benefit.” In its analysis of a proper civil penalty, the Court noted that “the effect of spending money to achieve compliance is often not mitigation of economic benefit — rather, plaintiffs may point to such expenditures as evidence of the regulated entity’s economic benefit to the extent the delay in making those expenditures allowed the regulated entity to use the money it saved productively.” Environment Texas Citizens Lobby v. ExxonMobil Corp., No. 15-20030 (May 27, 2016).

The Houston Professional Towing Association, a persistent if unsuccessful litigant, brought its third challenge to the City of Houston’s “SafeClear” freeway towing program.  It argued that recent changes to those ordinances had changed the facts enough to remove a res judicata bar from a previous lawsuit.  The Fifth Circuit disagreed, concluding that the purpose of the law remained the same (“to promote safety by expeditiously clearing stalled and wrecked vehicles”), and statistics about collisions after the program began were either indeterminate or showed that it enhanced safety.  Houston Professional Towing Association v. City of Houston, No. 15-20117 (Feb. 3, 2016).

Dr. Barrash, a member of a professional association of neurosurgeons, testified against Dr. Oishi, who was also a group member.  Dr. Oishi settled his case and filed a complaint with the association about Dr. Barrash, alleging (among other claims) that Dr. Barrash failed to review all relevant records.  The association censured Dr. Barrash, who then sued the association, claiming a denial of due process and a breach of the association’s contract with its members.

The district court found a denial of due process as to part of the censure, which the association did not appeal.  The Fifth Circuit affirmed the Rule 12 dismissal of the rest of Dr. Barrash’s claims: “Dr. Barrash received sufficient due process, including notice, a hearing, and multiple levels of appeal, before he was censured for failing to review all pertinent and available records prior to testifying. Because the district court found only one basis of the censure to be unsupported by due process, the district court was correct in setting aside only that portion of the censure. Furthermore, no Texas court has recognized a breach of contract challenge to a private association’s disciplinary process.”  Barrash v. American Association of Neurological Surgeons, No. 14-20764 (Feb. 3, 2016).

The district court abstained under the “primary jurisdiction” doctrine in deference to a FERC proceeding.  On the threshold question of appellate jurisdiction, the Court concluded that Hines v. D’Artois, 531 F.2d 726 (5th Cir. 1976) was still good law, and allowed it to consider an otherwise-interlocutory appeal: “[T]he district court’s order resulted in Occidental being ‘effectively out of court’ and therefore functioned as a final decision.”  On the merits, the Court remanded with instructions to not stay the court case indefinitely, but to instead stay for 180 days and assess the status then.  Occidental Chem. Corp. v. Louisiana Public Service Comm’n, No. 15-30100 (Jan. 4, 2016).

Susan Rothkamm sued for wrongful levy, after the IRS seized a CD in her name to satisfy a tax liability of her husband.  The Fifth Circuit reversed the dismissal of her claim, finding that she had standing as a “taxpayer” under the broad definition of 7701 of the Internal Revenue Code: “The term ‘taxpayer’ means any person subject to any internal revenue tax.”  The Court also found that limitations was tolled during the pendency of her application for a Taxpayer Assistance Order, and that the IRS did not have discretion to affect the length of that tolling period.  Rothkamm v. United States, No. 14-31164 (Sept. 21, 2015).  A dissent warned: “I dissent from the majority’s newly minted tolling rule. While this creativity is driven by a desire to achieve fairness, it suffers the vice common to such endeavors – it does the opposite by disrupting a carefully structured regime for the resolution of disputes between the IRS and property owners.”

The issue in United States v. CITGO was whether an “equalization tank” — a holding tank that plays a role in the process for handling oil refinery wastewater — is an “oil-water separator” within the meaning of the regulations implementing the Clean Water Act.  The jury instructions quoted the regulation’s definition of an oil-water separator and then added: “[t]he definition of oil-water separator does not require that [it] have any or all of the ancillary equipment mentioned such as forebays, weirs, grit chambers, and sludge hoppers . . . . An oil-water separator is defined by how it is used.” The Fifth Circuit found an abuse of discretion in that additional sentence and reversed CITGO’s convictions: “This purely functional explanation is not what [the regulation] says, however: it defines an oil-water separator by how it is used and by its constituent parts. . . .  Although the jury was also provided the exact text of Subpart QQQ, the court’s instruction told them what it means and thus undoubtedly affected the verdict. For this harmful error, the Clean Air Act convictions must be reversed.”  No. 14-40128 (Sept. 4, 2015).