Category Archives: regulation

In Which another Federal Judge Gets it Right

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Recall Halbig v Sebelius, the case wherein plaintiffs objected to subsidies being paid to Obamacare plan purchasers when the those plans were bought through ObamaMart, the Federally run health plan exchange, instead of through State-run health plan exchanges. The text of the Obamacare law allows the latter and bars the former. The DC Circuit agreed with plaintiffs and struck down the subsidies. (The current status of that ruling is that it’s been stayed pending review of Halbig by the DC Circuit sitting en banc.)

US District Judge Ronald White, of the Eastern District of Oklahoma, has ruled on a similar case that came up in his district, a part of the 10th Circuit. I won’t go into the specifics of Pruitt v Burwell, White’s case; the cases are very similar, and the point I want to make here is slightly different, anyway. I will note that plaintiff Pruitt is Oklahoma Attorney General Scott Pruitt, and defendant Burwell is Sylvia Mathews Burwell, HHS Secretary (sitting in for Kathleen Sebelius under an arcane Federal rule that allows such things). I will note further that Treasury Secretary Jacob Lew also was a defendant in this case, and leave things there.

White ruled for the plaintiff, which means he also held that the subsidies paid to Obamacare plan purchasers who bought them through ObamaMart are illegal.

Here’s where things get interesting.

In his conclusion, White wrote [citations omitted, emphasis mine]

Other judges in similar litigation have cast the plaintiffs’ argument in apocalyptic language. The first sentence of Judge Edwards’ dissent in Halbig is as follows: “This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (‘ACA’).” Concurring in King, Judge Davis states that “[appellants’ approach would effectively destroy the statute….” Further, “[w]hat [appellants] may not do is rely on our help to deny to millions of Americans desperately-needed health insurance….”

And

Of course, a proper legal decision is not a matter of the court “helping” one side or the other. A lawsuit challenging a federal regulation is a commonplace occurrence in this country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision, which is understandable and appropriate. “[H]igh as those stakes are, the principle of legislative supremacy that guides us is higher still…. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”

And

This is a case of statutory interpretation. “The text is what it is, no matter which side benefits.” Such a case (even if affirmed on the inevitable appeal) does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will. … “But in the last analysis, these always-fascinating policy discussions are beside the point. The role of this Court is to apply the statute as it is written – even if we think some other approach might ‘accor[d] with good policy.’“

Finally, quoting from a ruling by his own 10th Circuit appellate court,

In reviewing statutes, courts do not assume the language is imprecise…. Rather, we assume that in drafting legislation, Congress says what it means.

And that’s the deal. A law says what Congress—the People’s directly elected representatives—says it says. A judge, or any appellate court at any level of our judicial hierarchy, can only apply that law to the case before him. Most especially, he cannot rewrite the law or “creatively interpret” it into something more agreeable to his personal philosophy.

Oh, and just to saucer and blow the thing, White formally ruled pretty clearly:

The court holds that the IRS Rule [allowing those subsidies] is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, pursuant to 5 USC §706(2)(A), in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, pursuant to 5 USC §706(2)(C), or otherwise is an invalid implementation of the ACA….

Judge White’s ruling can be seen here.

 

h/t Jonathan Keim of the National Review Online

Ireland, Luxembourg, UK, and EU Commitments

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In a letter to the Irish government published Tuesday, the European Commission, the 28-member bloc’s central antitrust authority, said it had reached the “preliminary view” that tax deals struck in Ireland in 1991 and 2007 in favor of Apple constituted state aid.

1991! No statute of limitations here. That’s a small matter, though. The larger matter is the degree of freedom that sovereign nations have to govern their internal affairs while remaining a part of the European Union.

The beef here, and it’s a similar one involving Fiat in Luxembourg, and Starbucks and others in other constituent nations of the EU (the details vary from case to case), is this. Ireland didn’t impose a high enough tax on Apple’s Irish-earned income to suit the Authorities of the EU. That letter, in the form of a “report,” complained:

The main question in the present case is whether the rulings confer a selective advantage upon Apple insofar as it results in a lowering of its tax liability in Ireland….

The EU long has objected to the low Irish tax rates, insisting that these are somehow unfair to the other member nations, nations that have much higher tax rates. And no, don’t expect those nations to lower their taxes to compete; Ireland must raise its taxes so as to be less competitive.

The EU complained further:

[There were] several inconsistencies in the application of the transfer pricing method chosen when determining profit allocation [and costs had been] reverse engineered so as to arrive at a taxable income.

Because it’s shameful for a company—or a nation—to work to protect the company’s (and so the company owners’) money. It’s not their money, after all, it belongs to the EU. To paraphrase a man from the other side of the Pond, they didn’t earn that. Somebody else made that happen.

As James Stewart, a tax expert at Trinity College Dublin, noted,

There’s no doubt that this is damaging to Ireland. There’s a deeply held belief that our low corporate tax regime is central to Ireland’s industrial policy. The commission letter gives notice that these types of tax rates are under scrutiny. It will be much more difficult for Ireland to give similar deals to other multinational companies.

But that doesn’t matter. Ireland didn’t earn that, either.

The UK needs to watch this situation in Ireland very carefully and to think long and hard about the value of an EU commitment and the cost of EU insistence on intruding into the domestic affairs of its member nations. The importance of the occurrence of the UK’s EU membership referendum has gained immeasurably from this EU behavior, and the outcome of that referendum now is even more important to the vitality of the UK.

Ireland, Luxembourg, and the others, also need to think very carefully about the value they’re gaining from EU membership, and the costs they’re bearing from that membership. What is the EU’s commitment to its members, if it reserves the right to intrude?

The European Commission’s allegations can be seen here.

Arrogance and Encryption

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I wrote a bit ago about liberty and encryption. Here’s an example of the arrogance of the government’s attitude toward an American citizen encrypting his communications against government snooping.

Regarding Google and Apple plans to market encryption capabilities for their smart phones, FBI Director James Comey had this to say:

What concerns me about this is companies marketing something expressly to allow people to place themselves beyond the law[.]

This comes in the context of Brent Kendall’s paraphrase of Comey’s concern in Kendall’s WSJ article, also summarized in the link just above

FBI Director James Comey on Thursday said he is concerned about moves by Apple Inc and Google Inc to market phones that can’t be searched by law enforcement….

There are two things wrong with this, both of which a talented lawman at the peak of his career knows full well. First is the fact that encryption does not at all place anyone “beyond the law:” get a warrant. Also, the government, as has been well publicized, has an IT capacity fully capable of breaking encryption should the cell phone’s owner decide jail is preferable to honoring the warrant. Finally, the cell phone service providers aren’t the ones engaged in the communications of government interest; the cell phone owners are. The only legitimate targets of warrants for communications are the communicators, not the service providers.

The second thing wrong is the appalling arrogance inherent in Comey’s quoted statement. Leaving aside the foolishness of his claim of unsearchability, he’s cynically conflating “the law” with “law enforcement,” the police. Of course, this is…inaccurate. “The law” is what we citizens, through our elected representatives, say it is; the police are not the law but folks we hire to enforce it.

Here is the modern Liberal government in action.

Liberty, Security, and Encryption

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Moves by Apple Inc and Google Inc to put some smartphone data out of the reach of police and the courts are raising alarms inside US law-enforcement agencies, current and former officials say.

Of course the government is upset. Heaven forfend anything should interfere with its convenience in fishing for wrong-doing in our private correspondence. Privacy, though, is a necessary component of individual liberty and responsibility.

There is a trade-off, to be sure, between that and government’s ability to do the job of protecting us from others and from extra-national threats that we’ve hired it to do, but we must be very wary about how much of our liberty we surrender and how much of our responsibility we foist off, and we must be extremely chary of the trade-offs we make in that regard.

One Justice Department official said that if the new systems work as advertised, they will make it harder, if not impossible, to solve some cases. Another said the companies have promised customers “the equivalent of a house that can’t be searched, or a car trunk that could never be opened.”

“Harder to solve,” perhaps. “Impossible,” though, is a coarse exaggeration: our cops are better than that. Additionally, it’s long been American philosophy that it’s better that ten guilty men go free than one innocent man gets locked up. Today’s threats aren’t enough to walk away from that bastion principle of liberty.

As to that second plaint, it’s another exaggeration. The searches might get harder, but the devices are easily controllable, and get a warrant.

And this:

Andrew Weissmann, a former Federal Bureau of Investigation general counsel, called Apple’s announcement outrageous, because even a judge’s decision that there is probable cause to suspect a crime has been committed won’t get Apple to help retrieve potential evidence. Apple is “announcing to criminals, ‘use this,’ ” he said. “You could have people who are defrauded, threatened, or even at the extreme, terrorists using it.”

However. It isn’t Apple that’s being accused, or suspected, or against whom probable cause is being alleged, it’s the cell phone owner. Searching Apple’s facility because the light is better there is…faulty.

Weissman also ignores both the right of an American citizen to protect himself against a government that has shown itself increasingly intrusive, avaricious, and controlling, and the fact that a warrant must be obtained on the one hand, and on the other, once a warrant has been obtained, the government can use its own facilities to conduct the search. These facilities include both the ability to sanction the phone’s owner for not providing the password and the use of government’s IT facilities for cracking the password.

Then there’s another question. Government cannot assume our responsibilities in our place morally. If government does assume our responsibilities in our place legally, we will have lost our individual liberties and responsibilities.

Without individual liberty and responsibility not only can there be no security, there can be no hope of security.

More Actual Facts

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…about climate change. In a paper, Atmospheric controls on northeast Pacific temperature variability and change, 1900–2012, released last Monday by the Proceedings of the National Academy of Sciences, roughly translated for us laymen by the AP, authors Jim Johnstone, at the time of his research with the Joint Institute for the Study of the Atmosphere and Ocean at the University of Washington, and Nathan Mantua, research scientist with the NOAA Fisheries Service in Santa Cruz, CA, found that northeast Pacific (that’s abeam the US) ocean warming since 1900 correlates better with naturally occurring wind pattern changes than with any pattern of human greenhouse gas injection into the atmosphere. According to Johnstone,

What we found was the somewhat surprising degree to which the winds can explain all the wiggles in the temperature curve. So clearly, there are other factors stronger than the greenhouse forcing that is affecting those temperatures[.]

Also damaging to the climate panic-mongers’ case were these facts:

[O]ne steep ocean warming period from 1920 to 1940 predates the big increases in greenhouse gases, and an ocean cooling period from 1998 to 2013 came while global average temperatures were at or near all-time highs.

Of course the climate pseudo-science folks demur.

They pointed out that the study sees a correlation but did not do the rigorous statistical and computer analysis to show that the cause of the wind changes were natural—the kind of analysis done when scientists attribute weather extremes to global warming.

This would be the same computer analysis—computer modeling—that has found itself unable to predict, simultaneously, the past and the present, and which predictions of the future have been wildly variable and heavily dependent on the specific values assigned to a myriad of model inputs.

The abstract is here; the full article is behind the PNAS‘ login wall.