Last week, the D.C. Circuit handed the Trump Administration two big victories based upon Dalton v. Specter, which two panels took to stand for a broad principle limiting judicial review. It decided eight other cases, and many of those were consequential administrative law decisions too.

The Specter in Global Health Council v. Trump and NTEU v. Vought

Dalton v. Specter was a case about the closing of the Philadelphia Naval Shipyard. The President decided to order its closure under the Defense Base Closure and Realignment Act of 1990. The Supreme Court held that there would not be judicial review of compliance with the statutory procedures for a base closure. The President’s decision was not reviewable. The Court had already decided Franklin v. Massachusetts, which, as Specter summarized it, concluded “that the APA does not apply to the President” but “noted that the ‘President’s actions may still be reviewed for constitutionality.’” But non-APA constitutional review was not available in Specter. The Court explained that it had distinguished between constitutional claims and “claims that an official has acted in excess of his statutory authority.” The claim in Specter was a statutory claim based on a violation of the Base Closure Act. And because it was a statutory claim, “the exception identified in Franklin for review of constitutional claims . . . [did] not apply.” According to the Specter Court, Youngstown Sheet & Tube Co. v. Sawyer was distinguishable because it “involved the conceded absence of any statutory authority, not a claim that the President acted in excess of such authority.” The Base Closure Act committed the decision to the President’s discretion, and that was the end of the matter, so far as the federal courts were concerned.

In Global Health Council v. Trump, the D.C. Circuit relied on Specter to hold that recipients of USAID foreign aid spending could not bring their constitutional separation-of-powers claims challenging the Trump Administration’s impoundment of funds. The district court had held the executive had no authority to impound the funds and entered a preliminary injunction requiring it “to make available for obligation the full amount of funds that Congress appropriated for foreign assistance programs.” A divided panel vacated the injunction on the theory that the grantees had no right of action. Of course, litigants with standing bring constitutional separation-of-powers claims all the time, even without specific statutory authorization to sue. But not this time, Judge Henderson wrote in an opinion joined by Judge Katsas. The grantees were “foreclosed from [bringing their constitutional claims] by Dalton v. Specter,” which prevents “effort[s] to recast statutory claims as constitutional ones.” The grantees’ constitutional claims were really statutory claims because the grantees sought “to enforce the [impoundment] statutes.” Under 2 U.S.C. § 687, the Comptroller General was the proper party to enforce the statutory requirements. The Congressional Budget and Impoundment Control Act precluded an APA claim and could not be the basis for a nonstatutory ultra vires claim either.

Judge Pan dissented and argued that Specter was not controlling. She began with a principle: “When it comes to the spending of government funds, the separation of powers is particularly stark: ‘Congress has absolute control of the moneys of the United States.’” In her view, the district court enforced that principle in an opinion that “was a shining example of how our system of checks and balances is intended to work.” By contrast, Judge Pan continued, “[m]y colleagues in the majority depart from the norms of impartial appellate review to reverse the district court on a ground that was not properly presented by the government. And they announce a new and sweeping constitutional rule in the President’s favor.” In other words, the majority “misinterprets Dalton v. Specter, and ignores that the government has relied on the President’s constitutional authority to justify his actions here, which makes the court’s entire analysis under [Specter] inapposite.”

In NTEU v. Vought, the D.C. Circuit again relied on Specter and held that the plaintiffs could not bring their constitutional separation of powers challenge to the Trump Administration’s actions regarding the Consumer Financial Protection Bureau (CFPB). What were those actions? Views differ. The district court found that the CFPB’s leadership decided to shut the agency down, which likely violated the law. But to the court of appeals, management was just restructuring: the CFPB “undertook a series of actions to substantially downsize the agency.”

Writing for the court, Judge Katsas, who was joined by Judge Rao, vacated the district court’s preliminary injunction. Equity did not provide a cause of action because of Specter. Judge Katsas wrote that plaintiffs cannot get into equity by recasting statutory claims as constitutional ones. The “supposed separation-of-powers violation turns entirely on whether CFPB officials violated the governing statutes,” which meant the claim was a statutory claim, not a constitutional claim, and must meet the demanding standards for an ultra vires action. And because “plaintiffs expressly disavow[ed] any such ultra vires claim,” they did not show that this standard was met. Nor could they show a final agency action reviewable under the APA. Their remaining claims for wrongful termination of employment had to go through the Civil Service Reform Act process.

Judge Pillard dissented, arguing that “[t]he notion that courts are powerless to prevent the President from abolishing the agencies of the federal government that he was elected to lead cannot be reconciled with either the constitutional separation of powers or our nation’s commitment to a government of laws.” The district court, Judge Pillard argued, certainly did not commit clear error in finding that the Administration acted “to close the CFPB and cease to perform the work that Congress created it to perform.” This was final agency action reviewable under the APA. Moreover, Judge Pillard reasoned, Dalton was not the controlling case on plaintiffs’ constitutional claim. Instead, the controlling precedent was Youngstown, because as in that case, the President “acted without any statutory authorization whatsoever.”

Last Week’s Remaining Administrative Law Opinions

In 2019, National Public Radio reported that “[m]ore than a year and a half after two major hurricanes struck the U.S. Virgin Islands, the effects of the storms are still obvious.” The Virgin Islands Housing Finance Authority spent nearly $600 million on restoration projects and sought reimbursement from the Federal Emergency Management Agency (FEMA) under federal regulations providing for reimbursement for costs of responding to major disasters. The Authority and FEMA disagreed about roughly $85 million. In Virgin Islands Housing Finance Authority v. FEMA, the Authority lost its Federal Arbitration Act (FAA) and APA claims about the disputed reimbursement. It lost its FAA claim because it missed (by one day!) the statutory deadline to serve notice of its motion to vacate the Civilian Board of Contract Appeals’ award. The Authority argued for an exception to this statutory deadline when the arbitrators lacked authority or exceeded their powers. But Judge Garcia, joined by Judges Walker and Pan, held that the FAA does not have such an exception. At the same time, the FAA precluded an APA claim. To hold otherwise, Judge Garcia wrote, “would undercut [the FAA] at every turn.”

Sprint Corporation v. FCC reminded us that “[e]very cell phone is a tracking device.” That is why Congress required telecommunications carriers “to take ‘reasonable measures’ to protect [customer proprietary network information (CPNI)] from unauthorized access by third parties.” The Federal Communications Commission (FCC) found that Sprint and T-Mobile did not do that and fined them $92 million combined. With an opinion by Judge Pan, joined by Judges Henderson and Garcia, the D.C. Circuit denied the carriers’ petitions for review of the FCC’s orders. Sprint and T-Mobile argued that they did not violate the law. But under “the best reading of the statute,” the carriers were wrong: The customer location information that they failed to protect “plainly” was CPNI within the Communications Act’s meaning. The FCC, moreover, reasonably concluded that the carriers did not have reasonable safeguards for that information. According to the carriers, the FCC miscalculated the fine, but here too the Commission acted reasonably. Finally, the D.C. Circuit rejected the carriers’ many constitutional arguments. The problem with their Seventh Amendment claim was that the carriers had a statutory right to a jury trial, which they waived. Their separation of powers claim—to wit, that the Constitution bars an agency from “both prosecut[ing] and adjudicat[ing] an enforcement action”—called for overruling Supreme Court precedent, which the D.C. Circuit cannot do. The carriers also argued that two FCC commissioners prejudged the issues but had no evidence that met the “high” bar for such a claim. And their nondelegation argument was confined to a footnote and therefore not worth considering.    

Lucas v. American Federation of Government Employees addressed the preclusive effect of the Federal Service Labor-Management Relations Statute (FSLMRS). Judge Garcia, joined by Judge Pillard in full and Judge Pan in part, held that the FSLMRS precluded a former federal employee from bringing a Fair Labor Standards Act (FLSA) claim but permitted her to bring an Americans with Disabilities Act (ADA) and a Title VII claim against her union. As for the Title VII and ADA claims, the union had no satisfactory answer to the dispositive question: “Why would Congress have intended to extinguish federal employees’ Title VII and ADA remedies and depart from the general norm of overlapping remedies only when they seek to sue their unions, and not when they sue their employers?” Judge Pan dissented on the Title VII and ADA claims, writing that “Congress created a specialized statutory scheme for federal employees, like Lucas, who claim that their unions did not fairly represent them. . . . Congress . . . designed the [Civil Service Reform Act] to be comprehensive and exclusive.”  

Vanda Pharmaceuticals v. FDA was a tour through various administrative law issues about hearings. Judge Garcia wrote the opinion, which Judges Pan and Edwards joined. First, the court of appeals asked, when does a statute permit an agency to use summary judgment procedures? The Federal Food, Drug, and Cosmetic Act (FDCA) says that a new drug application “will be approved if ‘the Secretary finds, after due notice to the applicant . . . and giving him an opportunity for a hearing,’ that certain criteria are met, including that the applicant provided substantial evidence of the drug’s efficacy.” It also “commands that the HHS Secretary has 180 days to ‘(A) approve [an] application’ or ‘(B) give the applicant notice of an opportunity for a hearing . . . on the question whether such application is approvable,’” and “describes the timeline on which a ‘hearing shall commence.’” Even so, the “FDCA does not mandate that FDA must hold a hearing before denying any new drug application.” The relevant sections of the FDCA (Sections 355(c) and (d)) must be read the way the Supreme Court read the “very similar text” of Section 355(e) in Weinberger v. Hyson, Westcott & Dunning, Inc. Second, even if a statute permits summary judgment procedures, when is the decision to deny a hearing arbitrary and capricious? The D.C. Circuit held that the FDA had arbitrarily denied the applicant a hearing because its reasoning depended on an inaccurate description of the evidence related to that question. Third, when does a petitioner need to exhaust a constitutional claim with the agency? The petitioner argued that there was an Appointments Clause problem with the issuance of the FDA’s final decision. But the petitioner did not raise that argument before the agency, even though the FDCA requires all objections to be raised first with the agency. Citing Circuit precedent, the court held that the Appointments Clause claim was forfeit.  

Georgia v. U.S. DOJ was a Freedom of Information Act (FOIA) decision arising out of election law challenges to Georgia’s Election Integrity Act, a 2020 law that, according to the challengers’ complaint, aimed “to make absentee, early, and election-day voting more difficult.” The U.S. DOJ and various organizations, which all challenged Georgia’s law as a racially discriminatory enactment, entered into a common-interest agreement for the litigation. Georgia tried to use FOIA to get all “DOJ communications with various non-governmental entities that are involved in the legal challenges” to the Election Integrity Act. DOJ produced many documents but withheld and redacted others under FOIA Exemption 5. The district court held that Exemption 5 did not shield the documents because they were not “intra-agency” records and that the attorney work-product privilege had been waived. The D.C. Circuit reversed the district court’s judgment in an opinion by Chief Judge Srinivasan, which Judges Garcia and Rogers joined. The court of appeals reasoned that Georgia was trying to use FOIA to create an uneven and unfair playing field in the litigation. Under the State’s theory, it could “obtain the opposing side’s privileged work product in the cases even if the opposing side cannot obtain Georgia’s.” Congress did not enact Exemption 5 to give litigants to tip the playing field against the government in litigation. Rather, “[a]n animating purpose of Exemption 5 is to prevent parties opposed to the government in litigation from using FOIA as a workaround to obtain privileged materials they could not access in the lawsuit.” Therefore, the D.C. Circuit held “that when the government exchanges attorney work product with aligned parties under a common-interest agreement rooted in shared interests and a need for confidentiality, the shared work product qualifies as ‘intra-agency’ material under Exemption 5.” The DOJ, moreover, did not waive the attorney work-product privilege when it shared documents with its fellow litigants under the common-interest agreement.

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Last week’s remaining opinions were not about administrative law issues. In United States v. Green, the D.C. Circuit rejected Fourth Amendment challenges to a criminal conviction, United States ex rel. Winnon v. Lozano addressed pleading standards in a qui tam case, and Pileggi v. Washington Newspaper Publishing Co. was about what a plaintiff must allege to have a cause of action in a Video Privacy Protection Act case.