The Eleventh Circuit decided two administrative law cases of note in July. In the first, it rejected Florida’s constitutional challenges to the Department of Education’s use of private educational accreditors. In the second, the Eleventh Circuit sided with the IRS in a taxpayer’s challenge to the agency’s rejection of a deduction.

Constitutional Challenges to Private Accreditors

First up is Florida v. Secretary, US Department of Education. The Higher Education Act requires that schools receiving federal student financial aid be accredited. See 20 U.S.C. § 1001(a)(5). As it has since the 1952 GI Bill, the federal government relies on private accreditors with voluntary memberships. Florida challenged the accreditation requirement as a violation of the non-delegation doctrine, the Appointments Clause, and the Spending Clause. In a unanimous opinion written by Judge Brasher and joined by Chief Judge Pryor and Judge Abudu, the court rejected all three challenges.

The court first rejected the non-delegation and Appointments Clause challenges for the same reason: accreditors do not exercise government authority. The court reasoned that the accreditors’ power comes “from their member institutions who voluntarily submit to their authority and by-laws.” It also found that the private accreditation requirement was “obviously connected to Congress’s goal that federal student aid flow to high quality institutions.” And with respect to the Appointments Clause in particular, the court explained that accreditors “do not exercise any functions recognized as significant government authority” and “do not occupy an office ‘established by Law’” under Article II, Section 2, Clause 2.

Throughout its analysis, the court emphasized how often governments rely on private accreditation and licensing. The court repeatedly noted that private accreditation predated the Higher Education Act. But it’s not clear that this observation answers Florida’s argument that private accreditation becomes unconstitutional when federal funds are tied to it. The court also noted that states condition business licenses on private accreditation. But that fact seems relevant only if those states have non-delegation and Appointments Clause doctrines that are similar to the federal ones.

Finally, the court rejected Florida’s argument that private accreditation violated the Spending Clause because the content of the requirement is not ascertainable. The court assumed without deciding that the ascertainability requirement applied, even though student aid flows to students, not Florida. The court then held that it was enough for Congress to “make the existence of the condition itself—in exchange for the receipt of federal funds—explicitly obvious.” The court added that any ambiguity in how that condition would be applied does not violate the Spending Clause.

Conservation Easement Deduction

In Savannah Shoals, LLC v. Commissioner of Internal Revenue, the Eleventh Circuit unanimously affirmed the Tax Court’s judgment for the IRS in a dispute over a conservation easement. Under the relevant Treasury Regulation, a taxpayer is entitled to a deduction for the donation of a conservation easement in the amount of the fair market value. 26 C.F.R. § 1.170A-14(h)(3)(i). The Eleventh Circuit has applied a “broad framework” for determining fair market value. Savannah Shoals argued that the Tax Court should have applied a narrower four-factor test often used by appraisers and sometimes used by the Tax Court. The Eleventh Circuit concluded that the narrower four-factor test was “consistent with the regulation’s text and our caselaw” but not required by it. The opinion was written by Judge Grant and joined by Judge Luck and Judge Moreno (sitting by designation).