The Eleventh Circuit decided three administrative law cases of note in September. First, the court held that the structure of the Gulf of Mexico Fishery Management Council violated the Appointments Clause, but the plaintiffs were not entitled to vacatur of the challenged rule. Second, the court denied a stay of non-monetary sanctions imposed on President Trump and his attorneys. And third, the court found no reversible error in a taxpayer’s challenge to the IRS’s rejection of his offer-in-compromise.

Appointments Clause Remedies

In Russo v. Secretary, U.S. Department of Commerce, the Eleventh Circuit decided an Appointments Clause challenge to a rule that had been proposed by the Gulf of Mexico Fishery Management Council and promulgated by the Secretary of Commerce. In an opinion written by Judge Brasher and joined by Chief Judge William Pryor and Judge Jill Pryor, the court concluded that the government was entitled to summary judgment. In so doing, it agreed with the Third and Fifth Circuits.

The Council has seventeen voting members, at least six of whom are not appointed by the President or Secretary of Commerce. The Council exercises four relevant powers. First, it proposes amendments to Fishery Management Plans and regulations for the Secretary’s consideration. Second, it assembles an administrative record. Third, it can compel the Secretary to issue emergency regulations, though only by a unanimous vote. Fourth, it can veto actions by the Secretary that establish limited-access fisheries, delegate management to the states, or repeal a Plan.

On the merits, the court held that the first three powers do not constitute “significant authority pursuant to the laws of the United States” under Lucia v. SEC. (The parties agreed that the Council occupies a “continuing position established by law.”) First, the proposal authority is not significant because the Secretary can reject or amend proposals. In addition to relying on the plain text of the statute, the court invoked presidential signing statements characterizing the Council’s proposals as “advisory” and, as a fallback, the canon of constitutional avoidance. Second, the record authority is not significant because the Secretary is not limited by the record. Third, the emergency powers are not significant because the Council cannot specify the content of the regulations and one member of the Council is also a subordinate of the Secretary (and thus can prevent a unanimous vote).

The court did hold that the veto power was significant. The Secretary cannot override the veto. And the court reasoned that the prospect of a veto might “deter” the Secretary from taking measures “that might provoke it.”

As to remedy, the court held that the unconstitutional power was not relevant to the challenged rule. The court chose “the narrowest constitutional remedy,” namely “to ignore any of the Council’s acts under its veto provisions.” The court saw “no reason to believe that Congress would prefer a Senate-confirmed Council without removal restrictions to a purely advisory Council that balances regional and state interests.” And it invoked the Supreme Court’s similarly narrow remedial approach in United States v. Arthrex, Inc.

Chief Judge Pryor concurred to raise a further point. The district court ordered that the unconstitutional provisions be “severed” from the Act. Chief Judge Pryor explained his view that federal courts lack the power to revise statutes. Instead, “[s]everability or separability is a question of statutory interpretation in a specific case.”

Trump v. IRS Sanctions

In Trump v. IRS,a panel of Judges Jordan, Rosenbaum, and Newsom denied a stay of sanctions imposed against President Trump, two of his sons, the Trump Organization, two of their lawyers, and the IRS. A few months after the Trump plaintiffs filed a complaint against the IRS, the Department of Justice announced a controversial $1.776 billion settlement and a release of “any and all claims” against the plaintiffs.

The district court found that the parties in the lawsuit were not adverse and acted in bad faith. It imposed non-monetary sanctions on two of the plaintiffs’ attorneys. It also prohibited the parties (or others “acting in concert with” them or “under [their] control”) from “referring to the purported ‘settlement agreement,’ or using, offering, admitting, or citing any of its provisions in any judicial, administrative, regulatory, arbitration, or any other official proceeding as evidence of a ‘settlement’ reached in this matter.”

Although the adversity and bad-faith findings involve administrative law, the stay decision was about interlocutory jurisdiction and the First Amendment. The panel concluded that there likely was not appellate jurisdiction over the sanctions against the attorneys. It further concluded that there was likely appellate jurisdiction over the speech-related sanction, but that the plaintiffs were unlikely to succeed on the merits of their challenge to the speech-related sanction. The appeal remains pending.

Rejected Tax Settlement

In Filipowski v. Commissioner, the court unanimously rejected a taxpayer’s argument that the IRS erred by not accepting his offer-in-compromise. In an opinion written by Judge Lagoa and joined by Judges Jordan and Rosenbaum, the court reasoned that the IRS did not abuse its discretion by rejecting the offer on public-policy grounds. The court emphasized the amount owed, the comparatively small size of the offer, and the taxpayer’s “consistent failure to comply with annual tax reporting requirements.” The taxpayer argued that there was a material factual dispute, but those facts pertained to the IRS’s estimate of what it could collect, not the basis for rejecting the offer.