UPDATED: Applying NFIB v. Sebelius in the Federal Circuits: Analysis of the Case Law

By Jeremy Kreisberg

More than one year has passed since the Supreme Court decided NFIB v. Sebelius, the major case concerning the constitutionality of the individual mandate and Medicaid expansion.  As you might remember, the Supreme Court upheld the individual mandate as a valid exercise of Congress’s taxing power, but Chief Justice Roberts and the four Justices in the joint dissent wrote that Congress did not have the power under the Commerce Clause to compel individuals to enter the health insurance market. Importantly, the Court drew a distinction between activity and inactivity, finding that Congress could not regulate the latter.  Some argued that this decision may have wide implications for other regulatory efforts by Congress.

Unsurprisingly, it did not take long for litigants to begin using the Court’s Commerce Clause analysis in an attempt to invalidate other federal statutes.  I undertook a review of federal circuit cases that have applied (not merely cited) NFIB‘s Commerce Clause analysis to determine how these litigants have fared.  After the jump, I have categorized the cases I found into those discussing the validity of criminal statutes and those discussing the validity of federal regulations on states (please let me know in the comments section if I missed some).  The main takeaway from my review is that, as of today, no circuit court has used NFIB as its justification for striking down a statute under the Commerce Clause.

But before I get there, I should note from the outset that it is not clear whether the Court’s “decision” on the Commerce Clause is binding on future courts.  David Post at the Volokh Conspiracy has a rather compelling take on why the Court did not need to reach the Commerce Clause issue, and thus that portion of the decision should be viewed as mere dicta.  Of course, Chief Justice Roberts insisted that the Commerce Clause portion of his opinion was necessary because that the most natural read of the statute did not lend itself to review under the Taxing Power, and only after deciding the Commerce Clause issue was he willing to construe the statute otherwise.  Post responds to that argument here.  On my review of the federal circuit cases, no circuit has actually reached the merits of this issue (although at least a couple of these courts have mentioned the issue without deciding it, and one court — the Ninth Circuit in United States v. Henry — even cited to David Post’s second article cited above).  I intend to take a broader look at the district court cases to determine whether a federal court has addressed this issue; I’ll have that post for you all in the near future.

Criminal Statutes

  • Firearm Possession – 18 U.S.C. § 922(g)(1): At least three circuit cases have upheld the constitutionality of section 922(g)(1).  This statute makes it unlawful for any person “who has been convicted in any court of[] a crime punishable by imprisonment for a term exceeding one year . . . to . . . possess in or affecting commerce[] any firearm.”  In United States v. Roszkowski, 700 F.3d 50 (1st Cir. 2012), cert. denied, 133 S. Ct. 1278 (2013), the First Circuit rejected the argument that the Commerce analysis in NFIB applies to either section 922(g)(1) or section 922(k), which makes it illegal to possess a firearm with altered serial numbers. The defendant argued that “simple possession of a firearm does not constitute commercial activity, and therefore cannot be regulated by Congress pursuant to the Commerce Clause.”  The court distinguished NFIB as a case about compulsion, whereas these statutes “prohibit affirmative conduct.”  Similarly, the Fifth Circuit in United States v. Alcantar, 733 F.3d 143 (5th Cir. 2013), chose to abide by its prior precedent upholding section 922(g)(1) because NFIB did expressly overrule those cases or express an intention to do so.  The Fifth Circuit restated this conclusion in United States v. Looman, 13-10004, 2013 WL 5716825 (5th Cir. Oct. 22, 2013). Finally, the Eleventh Circuit reached the same conclusion in United States v. Broughton, 12-14213, 2013 WL 5541482 (11th Cir. Oct. 9, 2013), holding that section 922(g) (and section 924(c), which makes it illegal to use a firearm during a crime of violence) does not “’compel’ individuals to become active in interstate commerce.”
  • Machinegun Possession – 18 U.S.C. § 922(o): In United States v. Henry, 688 F.3d 637 (9th Cir. 2012), cert. denied, 133 S. Ct. 996 (2013), the Ninth Circuit rejected a constitutional challenge to section 922(o).  Section 922(o) makes it “unlawful for any person to transfer or posses a machinegun.”  In this case, the statute was applied to the defendant who had converted his rifle into a machinegun at home, and the defendant contested that his possession of a homemade machinegun could not be regulated by Congress.  Although the court heard oral arguments two days before NFIB came down, the court still addressed NFIB in a footnote.  Much like the First Circuit in Roszkowski, the court explained that section 922(o) does not involve “requirement that individuals take action,” but rather a “prohibition of conduct.”
  • Sex Offender Registration and Notification Act (SORNA): The Sex Offender Registration and Notification Act (SORNA) “makes it a crime for someone who is required to register under SORNA to travel in interstate commerce and knowingly fail to update his registration.”  United States v. Robbins, 729 F.3d 131, 132 (2d Cir. 2013).  In Robbins, the Second Circuit considered whether a failure to update one’s sex offender registration constitutes inactivity beyond the reach of Congress’s powers under the Commerce Clause.  The court distinguished NFIB: “[U]nlike the uninsured in NFIB, the sex offenders who are subjected to SORNA’s requirements have all, in a sense, ‘opted in’ to the regulated group through their prior criminal activity. . . . And most significantly, whatever else SORNA might require, the registration requirement that Robbins himself failed to meet was triggered by activity: his change of residence and travel across state lines.” Similarly, in United States v. Cabrera-Gutierrez, 718 F.3d 873 (9th Cir. 2013), the Ninth Circuit distinguished NFIB by explaining that “SORNA does not regulate individuals ‘precisely because they are doing nothing.’”  Rather, “SORNA applies only to individuals who have been convicted of a sexual offense,” and, in the case at hand, its application was further based on the defendant’s “activities of traveling in interstate commerce and then failing to register.”
  • Child Pornography – 18 U.S.C. § 2251/2252: In United States v. Boyle, 700 F.3d 1138 (8th Cir. 2012), cert. denied, 133 S. Ct. 2371 (2013), a defendant convicted of sexual exploitation of a minor and possession of materials involving the sexual exploitation of a minor protested that NFIB requires the government to prove a connection between his conduct and interstate or foreign commerce.  The Eighth Circuit rejected this argument, finding that NFIB “did not address the federal government’s authority to regulate articles . . . that have moved in foreign commerce,” and citing to United States v. Lopez for the proposition that Congress could regulate such articles.  A slightly trickier question was presented by United States v. Rose, 714 F.3d 362 (6th Cir. 2013), cert. denied, 13-5332, 2013 WL 3735908 (2013), where the defendant was convicted of possession and production of child pornography.  In this case, the defendant argued that NFIB calls into question the logic of Gonzales v. Raich, which held that Congress could regulate homegrown marijuana as part of a larger regulatory scheme.  The Sixth Circuit had relied on Raich in upholding Congress’s authority to regulate the intrastate manufacture and possession of child pornography in United States v. Bowers, 594 F.3d 522 (6th Cir. 2010), so if the Supreme Court had implicitly overturned Raich, the Sixth Circuit might have to rethink its own precedent.  The Sixth Circuit avoided this issue by holding that NFIB “did nothing to abrogate [the Supreme Court’s] holding in Raich that Congress has the power to regulate purely local activities that are part of an economic class of activities that have a substantial effect on interstate commerce.”  The court further explained that unlike the uninsured individuals at issue in NFIB, the defendant was not a “passive bystander being forced into commerce” — after all, he was only subject to the statute because he had produced child pornography.
Congressional Regulation of States
  • Driver’s Protection Privacy Act: The Driver’s Protection Privacy Act (DPPA) regulates the ability of states to disclose a driver’s personal information without the driver’s consent.  In Senne v. Vill. of Palatine, 695 F.3d 617 (7th Cir. 2012), the Secenth Circuit concluded that the Supreme Court’s earlier decision to uphold the DPPA in Reno v. Condon was not affected by NFIB.  Although the defendant in this case, a Village in Illinois who had been penalized by the law (represented by the firm of Paul Clement, the attorney who argued for the states challenging the constitutionality of the individual mandate), did not raise NFIB in its challenge to the statute or its petition for certiorari, the court “for the sake of completeness” explained that the DPPA does not “penalize[]” a state for inactivity, “nor are they forced into activity,” because they are only regulated once they decide to deal in matters involving personal information.
  • Professional and Amateur Sports Protection Act: The Professional and Amateur Sports Protection Act (PASPA) prohibits most states from sponsoring gambling on professional or amateur sports.  The NCAA sued to prevent New Jersey from licensing gambling on amateur athletics, claiming that New Jersey was in violation of PASPA.  In Nat’l Collegiate Athletics Ass’n v. Governor of New Jersey, 730 F.3d 208 (3d Cir. 2013), the Third Circuit rejected the argument that Congress did not have the power under the Commerce Clause to pass PASPA. The court explained that “the problem in [NFIB] was that the method chosen to regulate (forcing into economic activity individuals previously not in the market for health insurance) was beyond Congress’ power.  Here, the method of regulation, banning an activity altogether . . ., is neither novel nor problematic.”

2 thoughts to “UPDATED: Applying NFIB v. Sebelius in the Federal Circuits: Analysis of the Case Law”

  1. Nice work, Jeremy. “The main takeaway from my review is that, as of today, no circuit court has used NFIB as its justification for striking down a statute under the Commerce Clause.” Time will tell if this case grows legs of its own, or becomes sui generis like a Bush v. Gore.

  2. Thank you, Professor Robertson. I think there very well may be an interesting analogy here to Bush v. Gore. I ultimately expect that the Commerce Clause portion of NFIB will similarly become the type of sui generis opinion that yields little, if any, practical application. But I expect that it will be for a different reason:

    With Bush v. Gore, I simply think the Court is unwilling to extend the equal protection principle in the case to election law generally. Of course, the Court famously stated that its decision in Bush v. Gore was “limited to the present circumstances, for the problem of equal protection in election processes generally presents many complexities.” I read that rather extraordinary sentence as an admission that the Court knew that the logical extension of its rationale would invalidate many more election schemes (recounts or otherwise) than the one in Florida.

    With NFIB’s Commerce Clause analysis, I think the five Justices who endorsed the activity/inactivity distinction would be quite comfortable applying that distinction whenever the federal government compels activity from individuals who did not take some action to enter the government’s regulatory scheme. However, I simply don’t think Congress compels activity very often, if at all, without another constitutional hook (such as, famously, the power to levy taxes). So while I imagine that the Court would be happy to apply its NFIB Commerce Clause analysis in other cases, I don’t expect that the Court will have many occasions to do so.

    Of course, only time will tell!

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