Pennsylvania v. Trump
351 F. Supp. 3d 791 (2019)
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Rule of Law:
An agency violates the Administrative Procedure Act (APA) when it issues broad exemptions to a statutory mandate without clear authority from Congress. A procedural failure to use notice-and-comment rulemaking for an interim rule cannot be cured by a later comment period on a final rule if the initial illegality taints the entire process by fundamentally changing the nature of the rulemaking.
Facts:
- In 2010, Congress enacted the Affordable Care Act (ACA), which required health plans to cover women's preventive services without cost-sharing.
- In 2011, the Health Resources and Services Administration (HRSA), acting on delegated authority, issued guidelines defining preventive services to include all FDA-approved methods of contraception, creating the 'Contraceptive Mandate.'
- Between 2011 and 2015, federal agencies established a narrow exemption for certain religious employers (like churches) and an accommodation for other objecting non-profit religious organizations.
- In October 2017, following a presidential executive order, federal agencies issued two Interim Final Rules (IFRs) that were effective immediately and without prior public comment.
- The 2017 IFRs dramatically expanded the exemptions, creating a 'Religious Exemption' for nearly any employer with a religious objection and a 'Moral Exemption' for many employers with non-religious moral convictions.
- The IFRs also eliminated the requirement for an exempt employer to provide any notice to the government or its insurer, making the prior accommodation system optional.
- In November 2018, the agencies promulgated two Final Rules that largely finalized the substance of the 2017 IFRs, with only minor technical changes, scheduled to take effect in January 2019.
Procedural Posture:
- The Commonwealth of Pennsylvania sued the federal government in the U.S. District Court for the Eastern District of Pennsylvania, seeking a preliminary injunction to block the 2017 Interim Final Rules (IFRs).
- The district court granted the preliminary injunction against the IFRs in December 2017.
- Defendants (the federal government) appealed the district court's decision to the U.S. Court of Appeals for the Third Circuit.
- The district court stayed further proceedings in the case pending the outcome of the appeal.
- While the appeal was pending, the agencies issued the 2018 Final Rules.
- Pennsylvania, now joined by the State of New Jersey, filed a motion to lift the stay in the district court, which was granted.
- The States then filed an Amended Complaint and a Second Motion for a Preliminary Injunction, asking the district court to enjoin enforcement of the 2018 Final Rules.
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Issue:
Do the 2018 Final Rules, which create broad religious and moral exemptions to the Affordable Care Act's contraceptive mandate, violate the procedural and substantive requirements of the Administrative Procedure Act (APA)?
Opinions:
Majority - Beetlestone, J.
Yes, the 2018 Final Rules violate both the procedural and substantive requirements of the Administrative Procedure Act. Procedurally, the failure to use pre-promulgation notice and comment for the Interim Final Rules (IFRs) was a fatal defect that could not be cured by the subsequent comment period on the Final Rules. Citing Third Circuit precedent in NRDC v. EPA, the court reasoned that issuing a rule illegally and then soliciting comments on 'finalizing' it improperly changes the rulemaking's frame from whether a policy should be adopted at all to whether an action already taken should be continued. This circumvention of the APA's requirements prejudices commenters and is impermissible. Substantively, the agencies exceeded their statutory authority under both the ACA and the Religious Freedom Restoration Act (RFRA). The ACA's text delegates authority to define what preventive services must be covered, not who must provide them; Congress specified that all non-grandfathered plans 'shall' provide coverage, indicating a clear mandate. Furthermore, RFRA does not require the sweeping exemptions created by the Final Rules, as it is the role of courts, not agencies, to interpret RFRA's demands, and existing precedent suggests these broad, blanket exemptions extend beyond RFRA's protections.
Analysis:
This decision reinforces strict adherence to the APA's procedural requirements, establishing that an agency's initial procedural error in forgoing pre-promulgation notice and comment can fatally taint a subsequent, otherwise compliant final rule. Substantively, the ruling curtails agency power to create broad exemptions that undermine a clear statutory mandate, asserting that Congress must grant such significant authority explicitly. It also affirms the judiciary's primary role in interpreting RFRA, preventing agencies from unilaterally determining the statute's requirements to justify sweeping regulatory changes. Finally, the court justified its grant of a nationwide injunction by reasoning that a more limited remedy would fail to provide the plaintiff states with 'complete relief' due to the interstate nature of employment and education.
