Notice & Comment

D.C. Circuit Review – Reviewed: On Repeat

If you’ve been waiting for a Miller Act case, I’m happy to say, wait no longer. In United States v. Hirani Engineering & Land Surveying, PC, the Court, in an opinion by Judge Rogers, reminded us to construe the Act liberally “‘in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects.’”   

For those keeping track, the last time we covered the Miller Act, as best as I can tell, it was to report on the court’s 2020 decision in none other than United States v. Hirani Engineering & Land Surveying, PC

Let’s, then, call this last week D.C. Circuit Review – Reviewed: On Repeat. After all, Hirani Engineering wasn’t the only case back for another round. 

The court also denied the petition for rehearing en banc in Washington Alliance of Technology Workers v. U.S. Department of Homeland Security, a long-running litigation involving a DHS rule permitting post-coursework on-the-job training for students on F-1 foreign-student visas. For details, you can look to our prior coverage here and here. Judge Henderson dissented from the denial of the petition for the reasons she had already given in her dissent from the panel’s opinion, namely, that in her reading the F-1 statute did not authorize the rule. Judge Rao also voted to grant rehearing, arguing that even though the program “may be longstanding” and “may even be good policy,” the panel’s decision effectively “rewr[o]te the immigration laws established by Congress.” 

Judge Rao wrote the opinion for the Court in Paypal v. CFPB. The Court addressed a narrow question: Does the CFPB’s Prepaid Rule, which regulates digital wallets, require a “model clause”? If so, why should we care? Well, Paypal and the CFPB both assumed that the Electronic Fund Transfer Act (“EFTA”) does not allow the CFPB to require model clauses. The CFPB, that is, must provide model clauses, and a financial institution may decide to avail itself of a safe harbor from liability by using a model clause. But the institution doesn’t have to, at least according to the parties’ assumptions in this case. The Prepaid Rule requires providers of digital wallets or other prepaid accounts to disclose information about certain fees, among other things. Paypal argued that the Rule would confuse consumers by requiring it to list fees that were irrelevant to its business. The Court concluded that the Rule did not impose a mandatory model clause.

What is a model clause, anyway? That question is more interesting than you might think. The EFTA doesn’t define “model clause.” Judge Rao parsed the EFTA and canvassed “legal parlance” to conclude that for the EFTA’s purposes, “a ‘model clause’ is a particular set of words, namely ‘readily understandable language,’ that prepaid account providers can adopt to satisfy their disclosure obligations and to benefit from the Act’s safe-harbor provision.” A model clause, in other words, is text a lawyer can lift off the rack and drop into a document “in full or adapt as needed.” With “model clause” defined to mean “specific copiable language,” Judge Rao concluded that the Prepaid Rule was not a model clause because it “does not mandate the use of specific language.” Sure, the Rule may require Paypal to disclose specific content and use a particular format, but that’s not the same as a requirement to pick up text off the rack and drop it into a disclosure. Now the case goes back to the district court for a fight over whether the Rule is arbitrary and capricious or unconstitutional under the First Amendment.

Finally, the Court held in CREW v. US Dep’t of Justice that the Bureau of Prisons needed to do more explaining if it is going to withhold information under FOIA Exemption 4 about its procurement of pentobarbital, which the government said in 2019 it was going to use for executions. The federal government used to use three drugs when it executed people. Then it stopped executions for about 16 years until July 2019, when the DOJ decided to resume executions using only pentobarbital, a death penalty policy change that prompted CREW to send a FOIA request to the Bureau of Prisons about federal procurement of the drug. The Bureau invoked, among others, FOIA Exemption 4 for confidential commercial information, including withholding “any documents disclosure of which would reveal the identity of its pentobarbital contractors.”

In an opinion by Judge Pillard, the Court held that the Bureau had not met its burden to invoke Exemption 4 because it had not “demonstrate[d] that the names [of its contractors] are commercial in and of themselves.” While the Bureau argued “that advocacy by death penalty opponents has made it difficult for governments to acquire pentobarbital for use in executions,” that “possibility does not render Exemption 4 applicable.” The Bureau argued specifically that if its contractors’ names “were disclosed, the contractors could face public opprobrium, … which in turn might hurt the contractors’ business or cause them to voluntarily exit the pentobarbital market.” The Bureau’s counsel at oral argument “went further to claim that Exemption 4 covers any confidential information the disclosure of which could have commercial consequences, positive or negative.” Such an argument would, the Court pointed out, “stretch Exemption 4 to cover nearly any information that a business and the government agreed to keep secret, vitiating FOIA’s ability to shine light on public contracting.” And so the Court did not stretch Exemption 4 that far. It reversed and remanded to the district court for further proceedings to determine whether disclosure of particular contract terms might nevertheless be appropriate under Exemption 4 on the theory that “contractors customarily and actually maintain in secrecy their drug prices, expiration dates, and other” related contract terms. Judge Sentelle concurred in the judgment to emphasize his “hope that [a] full examination of the evidence . . . would be undertaken on remand.”

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