The Employer Mandate Delay: A Question of Administrative Law or Constitutional Faithfulness?

With the background of the last two posts, let’s consider whether “the President acted beyond his authority to execute the laws” by delaying the employer mandate, to paraphrase the question asked at the House Rules Committee hearing. Or, rather, let’s separate this question into two.

The first is whether the delay of the employer mandate was “legal.” This is the question that a court would ask if the issue were properly before it. For example, suppose that an employee sued his employer, alleging that he is entitled to employer-provided health care in 2014. Like Professor Dellinger, I am unsure why an employee couldn’t bring such a suit in reality, but for present purposes just assume that such a suit would present a justiciable controversy.

The employer would argue that its obligation under the ACA is contingent upon regulatory action (implementation of the reporting requirement) that has not yet occurred and further that the Secretary of the Treasury has the authority under IRC Section 7805(a) to provide transition relief in the implementation of a law relating to taxation. Providing a full evaluation of the merits of this argument would require more time and research than I wish to devote to the matter. Suffice to say that I personally would not wager a significant sum on the outcome either way, but I would be particularly loath to bet on the administration’s theory that Section 7805(a), which makes no reference to “transition relief” at all, somehow gives the Secretary authority to provide such relief in contravention of specific statutory mandates.

Note that the issues in my hypothetical lawsuit might be slightly different than if there were a direct challenge to the legality of the Treasury Department’s regulatory action under the Administrative Procedures Act, in which case the court might be more inclined to defer to the agency’s interpretation of its obligations under the law. For example, it is possible, as Professor Bagley observes, that a court would conceptualize the action simply as an exercise of enforcement discretion, rather than an attempt to waive legal obligations set forth in law. In other words, the Treasury Department did not actually delay the employer mandate (the story would go), but merely announced its intention not use scarce resources to collect penalties against employers who violate the mandate in the first year. This may not ultimately be a persuasive argument (Bagley isn’t persuaded), but a court is unlikely to view it as frivolous either.

In short, the courts will likely view the question of the “legality” of the employer mandate delay as the type of routine administrative law issue they face every day. This, more than a full-throated defense of the administration’s legal position, was the point Simon Lazarus and Professor Dellinger were making at the Rules Committee hearing. After all, every administration must interpret and apply thousands of complex statutory provisions (often conflicting and/or poorly drafted, to boot) every day. Even if an administration were just “calling balls and strikes,” to use Chief Justice Roberts’ phrase, it would inevitably be judged to have violated the law on a fairly routine basis. So even if the courts were to declare the administration’s action with regard to the ACA illegal, what’s the big deal?

This merely underscores that the question the House wants answered is not the question the courts will answer, even if a justiciable case were to be brought by a plaintiff with standing. They will not issue a decision on whether the Secretary, much less the President, has “faithfully executed the laws.” They will decide (at most) whether a particular administrative regulatory action complies with the law. Indeed, they may not even decide that, but merely conclude that the action is of the kind where the court should defer to the agency’s judgment as to whether or not it complies with the law.

So this brings us to the second question, the one the House actually wants to answer. Did the President comply with his constitutional duty to “take Care That the Laws be faithfully executed” and his oath to “faithfully execute” his office? This question necessarily is different than whether a president’s administration decided any particular legal issue correctly. In other words, showing that the administration acted “illegally” in a particular matter would not be sufficient to show faithlessness. Indeed, it would not even be necessary. A president or department head would not be acting “faithfully” if, for example, he made a legal decision for corrupt reasons.

For some reason this issue was not really joined at the Rules Committee hearing. Lazarus made a persuasive case that a good faith attempt to make necessary technical adjustments in the phase-in of a complex law would not be a violation of the Take Care Clause. Thus, if delay in the employer mandate was the necessary result of reasonable factual and legal judgments made by the Treasury Department regarding the feasibility of implementing the ACA’s reporting requirements by the statutory deadline, as claimed by Assistant Secretary Mazur’s letter of July 9, 2013, it is hard to see how the administration’s action, even if illegal, would amount to “faithless” execution.

But the Rules Committee majority is not operating under the assumption that Mazur’s explanation is true. Their theory is that the decision to delay the employer mandate originated with the President or his political advisors, not the Treasury Department, and was made because (a) the White House decided that implementing the employer mandate on January 1, 2014 was a bad idea from a policy and/or political perspective and (b) the White House did not want Congress to delay the employer mandate for fear it would open up other changes (such as delaying the individual mandate) that the President did not wish made. If this theory is correct, it would present an entirely different scenario than the one addressed by Lazarus in his testimony.

This is not, in all likelihood, a situation where two equally reasonable interpretations can be placed on the same set of facts. A review of the decision-making process should reveal whether Mazur’s explanation or the Republican theory is the correct one. Where did the idea of delaying the employer mandate originate? When did the Treasury officials responsible for implementing the reporting requirements decide they could not be completed in a timely fashion? Once this decision was made, was any consideration given to alternatives besides delaying the employer mandate? What kind of legal analysis was done with regard to the Secretary’s authority to delay the mandate under Section 7805(a)? What is the relationship between the initial decision to delay the employer mandate for all employers and the subsequent decision to delay it for an additional year for smaller employers?

Now even if it turns out that the Republican theory is accurate, defenders of the administration will undoubtedly claim that the President’s actions were still in “good faith” because the President unquestionably favors the ACA as a whole and sincerely desires to promote its overall objectives.  But if the President isn’t allowed to subvert a statutory scheme he believes to be bad policy, it is hard to see why he would be allowed to subvert a single statutory provision he believes to be bad policy.

Inevitably, however, any discussion of whether a president has violated his obligations of faithfulness will turn more on partisan and political considerations than constitutional analysis. Put another way, to the extent that Democrats and Republicans in the House sincerely want to work together to vindicate the institutional interests of the Congress, it is unrealistic to think this is going to happen by focusing on President Obama’s actions and decisions.

Fortunately, as discussed in the prior post, the official actually responsible to Congress in this situation is the Secretary of the Treasury. If the Secretary in fact made the decisions in question, he should be able to explain the decision-making process and most of the relevant documents should be in his possession or under his control. Although the Secretary is not charged with the same constitutional responsibilities as the President, he takes a statutory oath to “well and faithfully discharge the duties of [his] office,” 5 U.S.C. § 3331, and I cannot imagine that anyone would dispute this includes the duty to forthrightly explain his decision to the Congress.

Of course, if the Secretary did not make those decisions, that opens up another can of worms (yeah, I need to lose these dated expressions). But we will cross that bridge when we come to it (I can’t stop).

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